2017 (10) TMI 948 - HC - VAT and Sales Tax

Manufacture - cold drink - whether the process of dilution amounts to manufacture ? - Held that - it cannot possibly be countenanced or accepted that the process which the assessee adopts does not result in the creation of a new marketable commodity. A cold drink concentrate and an aerated drink obtained after processing the concentrate can never possibly be viewed as being of the same genre or form. The process undertaken by the revisionist results in the formation of a commodity which obtains an identity which is distinct from the original product which was cold drink concentrate. An aerated drink was manufactured from cold drink concentrate thus giving birth to a commercially distinct and independently recognized commodity - revision dismissed.

Summary

Issues:
- Whether the revisionist can be said to be engaged in the "manufacture" of a taxable commodity.

Analysis:
The High Court considered whether the revisionist's process of diluting cold drink concentrate, adding water, and infusing gas to create an aerated drink amounts to "manufacture" under the 1948 Act. The revisionist argued that no new marketable commodity is created, citing Supreme Court decisions. The assessing authority viewed the process as manufacture, which was reversed by the first appellate authority but restored by the Tribunal. The Court noted that the process results in a new marketable commodity, distinct from the original concentrate, falling within the ambit of "otherwise processing, treating or adopting goods."

The Court referenced a previous case to highlight the expansive definition of "manufacture" under the 1948 Act, emphasizing that the definition covers activities that may not necessarily result in a new commercial commodity. The Court rejected the argument that a new commercial commodity must be created, stating that the revisionist indeed engaged in the manufacture of goods by transforming cold drink concentrate into an aerated drink, a distinct commodity.

Regarding the reliance on Supreme Court decisions in PIO Food Packers and Lal Kunwa Stone Crusher Pvt Ltd, the Court distinguished those cases where no distinct new commodity was created, unlike in the present case. The Court concluded that the revisionist did engage in the manufacture of goods by producing an aerated drink from cold drink concentrate, leading to the dismissal of the revisions.