2015 (3) TMI 869 - HC - VAT and Sales Tax

Manufacture - conversion of wet blue leather into finished leather - whether process by which the wet blue leather is turned into finished leather amounts to 'manufacture'? Held that - conversion of wet blue leather into finished leather through several process such as splitting, shaving, neutralizing, bleaching, dyeing, fat-liquoring, stuffing, setting out, samming, drying, staking, and finishing. Wet blue leather loses its identity as wet blue leather and becomes a different commodity with a distinct identity in the market and in the industry concerned. Activity amounts to a manufacturing activity. - Following decision of GOLDEN LEATHERS Versus SECY., TAMILNADU SALES TAX APPELLATE TRIBUNAL 2010 (4) TMI 535 - MADRAS HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Seeking writ of Certiorari to quash impugned orders in three cases. Determining if the conversion of semi-finished leather into finished leather constitutes a manufacturing activity under tax laws.

Analysis:
In the present case, the petitioner, a dealer in dressed hides and skins, challenged the tax levied by the third respondent on the basis that processing semi-finished leathers into finished leathers does not qualify as a manufacturing activity. The Appellate Assistant Commissioner initially ruled in favor of the petitioner, setting aside the tax orders. However, the State appealed to the Tamil Nadu Sales Tax Appellate Tribunal, which partially allowed the State's appeals, leading to the petitioner filing writ petitions seeking relief.

During the proceedings, both parties cited the decision in Golden Leathers v. Secretary, TNSTAT, which established that the transformation of wet blue leather into finished leather constitutes a manufacturing activity. The Court highlighted that after undergoing several processes, wet blue leather loses its original identity and becomes a distinct commodity with a different market and industry identity. The Court emphasized that the process satisfies the criteria set by the Supreme Court to determine manufacturing activity.

The Court concluded that the conversion of wet blue leather into finished leather indeed amounts to a manufacturing activity, aligning with the precedent set in the Golden Leathers case. Therefore, the writ petitions were allowed, following the decision's principles, and no costs were awarded. Consequently, the related miscellaneous petitions were closed as well.