2024 (1) TMI 957 - SCH - VAT and Sales Tax

Process amounting to manufacture - blending and packing of tea - after the processing tea remained tea - HELD THAT - The observations of this Court in CHOWGULE CO. PVT. LTD. VERSUS UNION OF INDIA 1980 (11) TMI 61 - SUPREME COURT with reference to order of reference in Nilgiri Ceylon Tea Supplying Co. 1959 (7) TMI 40 - BOMBAY HIGH COURT must be construed in the distinct factual matrix and different goods involved. The order of the Bombay High Court was not applicable to the facts of the case in Chowgule Co. Private Limited as in the former the case concerned blending of tea which is also the subject matter of this case; whereas the goods involved in Chowgule Co. Private Limited was a particular kind of ore contraction which required a mixing up of several type of ores in particular quantities and in a particular manner and a procedure which involved a process and hence the same was covered within the definition of manufacture. However, in the instant case, mere mixing of different types of tea only for the purpose of marketing as tea and not a particular type of tea does not involve any process/manufacture within the meaning of the definition. The High Court rightly answered the questions of law raised before it in favour of the respondent-assessee and consequently, sustained the orders of the Commissioner appeals and Tribunal which had rightly set aside the order of the Assessing officer. Appeal dismissed.

Summary

Issues Involved:
1. Whether blending and packing of tea constitutes manufacturing.
2. Applicability of the Supreme Court decision in Chogala and Co. Pvt. Ltd. Vs Union of India to the present case.

Summary:

Issue 1: Blending and Packing of Tea as Manufacturing
The appellant (Revenue) challenged the High Court's decision that blending and packing of tea by the respondent-assessee did not constitute manufacturing under Section 2(e)(1) of the U. P. Trade Tax Act, 1948. The High Court held that the blending of tea did not result in a new product and thus did not qualify as manufacturing. The Revenue argued that blending different teas created a new commodity, thus constituting a manufacturing process. However, the Supreme Court noted that the definition of 'manufacture' in the Act is exhaustive and does not include blending as it does not alter the nature or character of the tea. The Court referred to the precedent set in Nilgiri Ceylon Tea Supplying Co. v. State of Bombay, which held that mixing different brands of tea without mechanical or chemical processes does not constitute manufacturing.

Issue 2: Applicability of Chogala and Co. Pvt. Ltd. Vs Union of India
The appellant cited several judgments, including Chowgule & Co. Private Limited, to argue that blending constitutes manufacturing. However, the Supreme Court distinguished the present case from Chowgule & Co., where the blending of ores to meet a specific contract requirement was deemed manufacturing. The Court found that the facts of the present case were more akin to Nilgiri Ceylon Tea Supplying Co., where blending tea was not considered manufacturing. The Court concluded that the High Court correctly applied the law and upheld the orders of the Commissioner Appeals and Tribunal.

Conclusion:
The Supreme Court dismissed the appeals, affirming that blending and packing of tea do not constitute manufacturing under the U. P. Trade Tax Act, 1948. The High Court's decision in favor of the respondent-assessee was upheld, and the orders of the Commissioner Appeals and Tribunal were sustained.