2007 (3) TMI 711 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against the cancellation of recognition certificate for purchase of CI castings due to manufacturing process carried out by a third party on job-work basis.

Detailed Analysis:
The present revision under section 11 of the U.P. Trade Tax Act, 1948 was filed against the order of the Tribunal dated December 29, 2000, pertaining to the assessment year 1995-96. The dealer, who was issued a recognition certificate for the purchase of CI castings, faced cancellation of the certificate on the grounds that the dealer was not directly manufacturing the goods but getting them manufactured through other parties on a job-work basis. The assessing authority's order was challenged by the dealer before the Deputy Commissioner (Appeals), Agra, who allowed the appeal and set aside the assessing authority's decision. Subsequently, the Commissioner of Trade Tax filed an appeal before the Tribunal, which rejected the appeal and upheld the decision of the first appellate authority.

The judgment referred to a previous case, Bulbu Prasad Amarnath v. Commissioner of Sales Tax, where it was held that for a dealer to be considered a manufacturer of a product, it is not necessary that the goods should be manufactured by the dealer directly. The law recognizes the dealer as a manufacturer even if the goods are manufactured through a third party on a job-work basis. The court emphasized that the key factor is the control and involvement of the dealer in the manufacturing process, regardless of whether the physical manufacturing is done by the dealer or through a third party.

In light of the precedent set by the aforementioned case, the court found that the present revision was squarely covered by the decision. It was reiterated that the manufacturing carried out by a third party on a job-work basis can still be attributed to the dealer, as long as the dealer exercises control and oversight over the manufacturing process. Consequently, the court upheld the order of the Tribunal, dismissing the revision as lacking merit.

In conclusion, the court affirmed the decision of the Tribunal based on the legal principle established in the previous case, emphasizing that the involvement and control of the dealer in the manufacturing process are pivotal in determining the dealer's status as a manufacturer, even if the physical manufacturing is outsourced to a third party on a job-work basis.