1999 (1) TMI 516 - AT - VAT and Sales Tax

Summary

Issues:
1. Application under section 8 of the West Bengal Taxation Tribunal Act, 1987 challenging rejection of provisional certificate.
2. Interpretation of the term "manufacture" under the West Bengal Sales Tax Act, 1994.
3. Consideration of whether the activities undertaken constitute manufacturing for tax exemption eligibility.
4. Analysis of the definition of "manufacture" under section 2(17) of the Act of 1994.
5. Examination of whether the finished product qualifies as a new commercial commodity.
6. Determination of eligibility for a provisional certificate under rule 26 of the West Bengal Sales Tax Rules, 1995.

Issue 1: Application under section 8 of the West Bengal Taxation Tribunal Act, 1987
The case involves an application challenging the rejection of a provisional certificate under the West Bengal Taxation Tribunal Act, 1987. The applicant, a company manufacturing perfumed coconut hair oil, sought exemption from tax on sales of goods. The rejection by the Deputy Commissioner of Commercial Taxes led to subsequent appeals and the filing of the application before the Tribunal.

Issue 2: Interpretation of the term "manufacture"
The primary issue revolves around whether the activities undertaken by the applicant amount to "manufacture" under the West Bengal Sales Tax Act, 1994. The applicant's counsel argued that the blending and refining processes involved in producing perfumed coconut oil constitute manufacturing, citing the definition of "manufacture" in section 2(17) of the Act.

Issue 3: Manufacturing for tax exemption eligibility
The Tribunal analyzed the processes undertaken by the applicant, including blending perfumes with coconut oil and filtration, to determine if they qualify as manufacturing activities. The contention was that the final product, sold under a specific brand name, should be considered a new commercial commodity eligible for tax exemption.

Issue 4: Analysis of the definition of "manufacture"
The definition of "manufacture" under section 2(17) includes producing, making, extracting, or blending goods. The Tribunal noted that blending, as mentioned in the definition, was a key aspect of the activities carried out by the applicant, supporting the argument that the processes constituted manufacturing.

Issue 5: Qualification as a new commercial commodity
The debate centered on whether the finished product, perfumed coconut oil packed under a brand name, could be classified as a new commercial commodity. The Tribunal considered trade parlance and previous decisions to determine that the product indeed transformed into a manufactured commodity distinct from its raw materials.

Issue 6: Eligibility for a provisional certificate
The Tribunal directed the issuance of a provisional certificate to the applicant, effective until a specified date, based on the establishment of the manufacturing unit and compliance with rule 26 of the West Bengal Sales Tax Rules, 1995. The impugned orders rejecting the certificate were set aside, affirming the applicant's eligibility for tax exemption.

In conclusion, the Tribunal allowed the main application, directing the issuance of a provisional certificate and setting aside the previous rejection orders, emphasizing the activities as constituting manufacturing and the finished product as a new commercial commodity deserving tax exemption.