2011 (5) TMI 875 - HC - VAT and Sales Tax

Summary

Issues:
Whether packaging of loose detergent powder into unit containers amounts to "manufacture" under the Assam General Sales Tax Act, 1993.

Analysis:
The petitioner, a registered dealer under the AGST Act, challenged an order by the Joint Commissioner of Taxes, Assam, which held that packing detergent powder constitutes "manufacture" and upheld the levy of sales tax on the packaged product. The petitioner argued that packing does not create a new product, and cited a previous order by the same authority that supported this position. The key question is whether the activity of the dealer qualifies as "manufacture" under the AGST Act.

The court analyzed the definition of "manufacture" in section 2(22) of the AGST Act, noting its broad scope compared to common understanding. Referring to a previous case, the court clarified that for an activity to be considered "manufacture," the final product must be notably different from the input. Applying this principle, the court found that packaging detergent powder does not transform the product into something other than detergent powder, thus not meeting the definition of "manufacture."

The court held that the revisional authority's decision was inconsistent with the legal interpretation established in the previous case. Consequently, the court set aside and quashed the impugned order, ruling in favor of the petitioner. The writ petition was allowed without any cost implications.