2003 (8) TMI 497 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the activities undertaken by the petitioner amount to "manufacture" as defined under the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954.
2. Whether the rejection of the renewal of the eligibility certificate was justified.

Issue-wise Detailed Analysis:

1. Definition of "Manufacture":

The primary issue was whether the processes undertaken by the petitioner for producing edible soyabean oil and til oil could be classified as "manufacture" under section 2(dd) of the Bengal Finance (Sales Tax) Act, 1941. The definition reads: "'Manufacture' with all its grammatical variations and cognate expressions means producing, making, extracting (or blending) any goods; but does not include such manufactures or manufacturing processes as may be prescribed." The court noted that no specific exclusions were prescribed under this section.

The petitioner argued that the processes involved in making the oil fit for human consumption, such as treating the oil with temperature, soil, activated carbon, and filtering through micro-processing, resulted in a new commercial commodity. The petitioner contended that the refined oil had a distinct identity and brand name in the market, thus qualifying as a new product.

However, the respondents argued that the activities did not produce a new commercial commodity but only changed the grade or degree of fineness of the existing product. The court agreed with the respondents, stating that merely refining the oil did not transform it into a new and distinct commodity. The court emphasized that "manufacture" implies a change that results in a new article with a distinct name, character, and use, which was not the case here.

2. Rejection of Renewal of Eligibility Certificate:

The petitioner's application for renewal of the eligibility certificate was rejected on the grounds that no manufacturing activity was carried out. The Assistant Commissioner and the Deputy Commissioner both found that the petitioner was merely repackaging refined soyabean oil and til oil without any significant transformation.

The court upheld these findings, noting that the processes described did not result in a new commercial commodity. The court referenced several precedents, including the Supreme Court's observation that "manufacture" involves a change that results in a new and distinct article. The court concluded that the petitioner's activities did not meet this criterion, as the refined oil remained essentially the same commodity as the input oil.

The court also dismissed the petitioner's reliance on various judgments related to the interpretation of taxing statutes, stating that there was no ambiguity in the definition of "manufacture" in this context. The court held that the repeated inspections and findings by the authorities were based on proper reasoning and due consideration of the materials on record.

Conclusion:

The court concluded that the processes undertaken by the petitioner did not amount to "manufacture" under the Bengal Finance (Sales Tax) Act, 1941. Consequently, the rejection of the renewal of the eligibility certificate was justified. The application was dismissed, and the judgment of the Tribunal was affirmed. There was no order as to costs.