1990 (7) TMI 135 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for sales tax exemption.
2. Definition of "manufacture" u/s 2(j) of the Madhya Pradesh General Sales Tax Act, 1958.
3. Conflict between Division Bench decisions in G.R. Kulkarni v. State and Bheraghat Mineral Industries v. Divisional Deputy Commissioner of Sales Tax.

Summary:

1. Eligibility for Sales Tax Exemption:
The petitioner, a registered small-scale industry, sought an eligibility certificate for availing sales tax exemption. The General Manager, District Industries Centre, Jabalpur, refused the certificate, stating that the conversion of stones into "gittis" does not constitute a manufacturing process.

2. Definition of "Manufacture" u/s 2(j) of the Act:
The core issue was whether the conversion of boulders or stones into "gitti" falls under the definition of "manufacture" u/s 2(j) of the Madhya Pradesh General Sales Tax Act, 1958. The definition includes any process of producing, preparing, or making goods, and the court found that the petitioner's process of crushing stones into "gittis" creates a new commercial commodity, thus qualifying as "manufacture."

3. Conflict Between Division Bench Decisions:
The Full Bench was convened to resolve the apparent conflict between the Division Bench decisions in G.R. Kulkarni v. State and Bheraghat Mineral Industries v. Divisional Deputy Commissioner of Sales Tax. The court concluded that the decision in G.R. Kulkarni, which held that making "gitti" from stones is a manufacturing process, was correctly decided. The decision in Bheraghat Mineral Industries was distinguished on the basis that it involved a different process (conversion of dolomite lumps into chips and powder), which did not create a new commercial commodity.

Conclusion:
The Full Bench held that the petitioner's process of converting stones into "gittis" is indeed a manufacturing process within the meaning of the Act. The impugned order dated July 11, 1988, was quashed, and the respondents were directed to consider the petitioner's application for an eligibility certificate, recognizing the process as manufacturing. The petitioner was awarded costs of the petition, with counsel's fee set at Rs. 500/-.