2021 (8) TMI 348 - HC - VAT and Sales Tax

Validity of assessment order - process amounting to manufacture or not - refining of oil from crude vegetable oil into refined vegetable oil - periods 2004-05 and 2005-06 - HELD THAT - The Supreme Court in the case of BP. OIL MILLS LTD. VERSUS SALES TAX TRIBUNAL AND OTHERS 1998 (9) TMI 507 - SUPREME COURT after considering a slew of judgments, has considered this identical issue holding the same in favour of the assessee. The conclusion of the assessing authority to the effect that the process of conversion of crude vegetable oil into refined vegetable oil would not amount to 'manufacture' is set aside - Petition allowed.

Summary

Issues:
Challenge to assessment orders under the Tamil Nadu General Sales Tax Act, 1959 for the periods 2004-05 and 2005-06 regarding refining of oil from crude vegetable oil into refined vegetable oil and whether it amounts to 'manufacture'.

Analysis:
The primary issue in this case revolves around whether the process of refining oil from crude vegetable oil into refined vegetable oil constitutes 'manufacture' under the Tamil Nadu General Sales Tax Act, 1959. The Sales Tax Appellate Tribunal had previously ruled in favor of the petitioner in a similar case for the period 2003-04. The Assessing Officer argued that the conversion process did not amount to manufacture, leading to a differential tax rate being levied along with penalties. However, the Commissioner of Commercial Taxes clarified that certain consumables, including furnace oil, could be purchased under concessional rates for use in the manufacturing process. The distinction between crude vegetable oil and refined vegetable oil as separate commercial commodities was emphasized, supported by relevant case law and legal interpretations.

The judgment delves into various legal precedents to define the term 'manufacture' in the context of the refining process. It references the expansive definition of 'manufacture' under the Central Excise Act and highlights the necessity for a distinct transformation resulting in a new commercial commodity. The analysis includes judgments from the Supreme Court emphasizing the emergence of a different article with unique characteristics or uses as a crucial aspect of the manufacturing process. The case law cited provides a comprehensive framework for determining whether a particular process qualifies as 'manufacture,' emphasizing the commercial and market distinctions between the original and refined products.

The judgment ultimately sets aside the assessing authority's conclusion that the refining process does not amount to 'manufacture.' Citing the precedent set by the Sales Tax Appellate Tribunal and the Supreme Court, the court rules in favor of the petitioner, quashing the impugned assessment orders for the periods in question. The decision highlights the importance of considering the commercial and market parlance in determining whether a process results in the creation of a new commercial commodity. The comprehensive analysis of legal principles and precedents supports the conclusion that the refining of crude vegetable oil into refined vegetable oil constitutes 'manufacture' under the relevant tax legislation.

In conclusion, the judgment provides a detailed and thorough analysis of the issue at hand, drawing on legal interpretations, case law, and statutory provisions to arrive at a well-reasoned decision in favor of the petitioner. The clarity and depth of the analysis ensure a robust understanding of the legal principles governing the classification of the refining process and its implications under the Tamil Nadu General Sales Tax Act, 1959.