2000 (9) TMI 1034 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of the rejection of the amendment of the registration certificate.
2. Whether the bottling of LPG constitutes a manufacturing process.
3. Competence of the Additional Commissioner of Commercial Taxes as a revisional authority.

Detailed Analysis:

1. Validity of the rejection of the amendment of the registration certificate:

The applicant-company, M/s. Eastern Gases Ltd., challenged the orders of the respondent No. 1, which rejected the company's prayer for amendment of its registration certificate (R.C.) to reflect it as a manufacturer. The company argued that the processing of LPG, including refining and bottling, constituted a manufacturing process. However, respondent No. 1 and subsequent revisional authorities rejected this claim, leading the company to file the instant application before the Tribunal.

2. Whether the bottling of LPG constitutes a manufacturing process:

The key issue was whether the bottling of LPG into cylinders constitutes a manufacturing process under the West Bengal Sales Tax Act, 1994 (the 1994 Act). The definition of "manufacture" in sub-section (17) of section 2 of the 1994 Act was examined, which includes producing, making, or extracting any goods but excludes works contracts or prescribed manufacturing processes. The Tribunal referenced the Supreme Court's interpretation that a process amounts to manufacture if it results in a new and different article with a distinct name, character, and use.

The company claimed that the bottling process involved several stages, including refining and blending LPG with mercaptan. However, the Tribunal found that these processes were not highlighted before the initial revisional authorities and were only elaborated before the Additional Commissioner of Commercial Taxes, an incompetent forum under the 1994 Act. The Tribunal endorsed the view that submissions before an incompetent forum are of no consequence and that the order passed by such a forum is non-est.

The Tribunal examined the company's project report, which described the bottling process as transferring LPG from storage tanks to cylinders without any characteristic change. The Tribunal noted that the company failed to produce technical literature or evidence to support its claim of additional processes. The Tribunal also rejected the company's reliance on the definition of "manufacture of gas" under the Gas Cylinders Rules, 1981, as it is limited in scope and not applicable to the 1994 Act.

The Tribunal referred to Supreme Court decisions, including Commissioner of Sales Tax, U.P., Lucknow v. Harbilas Rai and Sons and Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers, which held that a process amounts to manufacture only if it results in a new and distinct article. The Tribunal concluded that the company's bottling process did not result in a new product and thus did not constitute manufacture.

The Tribunal also addressed the company's claim of blending ethyl mercaptan with LPG, which was not substantiated with evidence. The Tribunal found that the Indian Oil Corporation Ltd. already added ethyl mercaptan to LPG, and there was no facility for mixing it at the company's bottling plant. Thus, the Tribunal concluded that the company's claim of blending ethyl mercaptan was unfounded.

3. Competence of the Additional Commissioner of Commercial Taxes as a revisional authority:

The Tribunal found that the 1994 Act does not provide for a third revisional forum. The appropriate revisional forums were the Assistant Commissioner and the Deputy Commissioner. The Additional Commissioner of Commercial Taxes, Durgapur Zone, lacked statutory competence to entertain a revision application against the order of the Deputy Commissioner. Consequently, the order passed by the Additional Commissioner was non-est and not considered by the Tribunal.

Conclusion:

The Tribunal dismissed the application, upholding the orders of the Commercial Tax Officer and the first two revisional authorities. The Tribunal found that the process of bottling LPG did not amount to manufacture and that the Additional Commissioner acted without jurisdiction. The application was dismissed with no order as to costs.

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