9911796707
TMI Blog1994 (12) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Orissa. 2.. The petitioners are registered dealers under the Act. Certificates of registration issued under section 9 of the Act indicate the nature of their business as manufacturing and wholesale distribution. The certificates further state that the dealer intend to use paper, board, binding cloth, rexines, thread, stitching wire, ink, maida and marble paper in the manufacture/processing of goods for resale and that they carry on business, inter alia, of manufacturing and otherwise producing for sale exercise book, register, etc. The petitioners purchased requisite machines for manufacturing exercise books, etc., and their factories were provisionally registered as S.S.I. unit. On February 13, 1987, entry 26-D was inserted in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries (O.J.C. No. 1269 of 1990 decided on May 2, 1991), it was held by the sales tax authorities that transformation of paper into exercise book did not constitute manufacture of a distinct commodity with character and use different from paper. The conversion only amounted to processing of goods. The petitioners have challenged these orders/actions of the sales tax authorities. 4. Undisputed factual position about the activity of petitioners in the preparation of exercise book, bound book, etc., is as follows: The petitioners purchase plain papers and by separate machines cut them, roll them, stitch them, apply sizing and bind them either by cloth or leather and sell these articles in the market as bound books, exercise books, etc. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96 STC 291 (Orissa) (O.J.C. No. 1166 of 1992, and other connected cases decided on July 29, 1994) it has been held that the activity of obtaining cotton from waste cotton amounted to manufacture of a product under the Act so as to attract the exemption from levy of sales tax under the Industrial Policy Resolutions. In arriving at the conclusion, the basic concept of manufacture and the insertion of the definition of the term "manufacture" in the Sales Tax Act by Act No. 21 of 1991 with effect from August 1, 1991, was also taken into consideration. The term "production" has a somewhat different connotation as held in the Commissioner of Income-tax, Orissa v. Budharaja Company [1993] 91 STC 450 (SC); AIR 1993 SC 2529. It is also held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodity. This Court held that Maharaja Book Depot's case AIR 1979 SC 180 was concerned with the provisions of the Essential Commodities Act and the Gujarat Essential Articles Dealers' Regulation Order made thereunder in which item at serial No. 14 "paper" included newsprint, paper board, straw board and exercise note books. For violation of the Act and the Order, the entire stock of exercise books was confiscated on the basis that they were included in the item "paper". The earlier decision rendered in Rameswarlal Murlidhar [1980] 45 STC 115 (Orissa) was challenged by the assessee in the Supreme Court. In Rameswarlal Murlidhar v. State of Orissa [1982] 51 STC 401 (SC), the following short order allowing the appeal was passed: "It is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is used for preparing prints and sketches of site plans, cannot be regarded as paper in the popular sense of that term. This decision has been rendered in the context of the U.P. Sales Tax Act. This time also attention of the learned Judges was drawn to the case of Maharaja Book Depot [1979] 2 SCR 138; AIR 1979 SC 180 but its ratio was held to be not applicable to sales tax law on the ground that therein conclusion was supported by reference to nature of item and the object and purpose of the Essential Commodities Act and the Regulation Order made thereunder. It may be mentioned that the decision in Macneill Barry Ltd. [1986] 61 STC 76 (SC) is a decision by the co-ordinate Bench of the Supreme Court rendered later than Maharaja Book Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though not defined, was always considered on the lines of the definition clause. The definition of the term "manufacture" recently introduced is nothing new. It is a usual definition of the term to be found in several taxing statutes. There are, therefore, enough circumstances to presume that the insertion of the term "manufacture" in the definition clause was essentially explanatory, clarificatory or declaratory. Such provision can be read as intended to have retrospective effect. No explanation was given about the circumstances in which introduction of the definition of the term "manufacture " in the Act was thought of. 11.. Having regard to the totality of the background, it seems to us that the process undertaken by the petitioners i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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