2005 (4) TMI 562 - HC - VAT and Sales Tax

Summary

Issues:
Claim for sales tax exemption based on manufacturing activity at a new industrial unit.

Analysis:
The judgment pertains to a case where an appellant, a limited company engaged in manufacturing and sale of goods, including cement, set up a unit in Karnataka and claimed exemption from sales tax under a notification by the State Government. The State Level Committee concluded that the appellant's unit was not a manufacturing unit, leading to a challenge in a writ petition. The single Judge found that the unit was a packing unit, not manufacturing cement, hence not eligible for exemption. The appeal questions whether the unit in Karnataka qualifies as a manufacturing unit for tax exemption. The appellant argued that certain stages of cement production were carried out at the Karnataka plant, while the Government Advocate contended that activities were incidental to packing. The appellant's requisition for "F" forms indicated stock transfers from Gujarat to Karnataka, suggesting no manufacturing process in Karnataka. A technical committee report confirmed no manufacturing process at the Karnataka unit, emphasizing no chemical change in cement during homogenization. The court referenced a Supreme Court judgment defining manufacturing as creating a new substance, which was not evident in this case. The end-product remained cement, indicating no manufacturing activity in Karnataka. Consequently, the court dismissed the writ appeal, denying the appellant's claim for tax exemption.