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TMI Blog1997 (8) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... aste lubricating oil, removed impurities therefrom and resold the same as lubricating oil. The first sale was made by it on 17th February, 1987. On 29th March, 1987, the assessee applied to the Deputy Commissioner of Sales Tax under section 52 of the Act calling upon him to decide the following question: "Whether, the lubricating oil sold by us vide our invoice dated 17th February, 1989 after removing the impurities form the used lubricating oil is liable to sales tax and if so what rate?" In its application to the Deputy Commissioner of Sales Tax, the assessee described the process applied by it to the used lubricating oil for removing the impurities and making the same fit for sale as lubricating oil as under: "Lubricating oils during service, get contaminated with abrasive materials like metal particles-sediments, carbon particles form combustion in auto engines, dust particles from atmosphere as also water and fuel. Therefore, as per the recommendation of machine manufactures, the lubricating oil is drained out of the machine at some fixed time. The oil does not cease to have its lubricating property but due to aforesaid abrasive contaminates it has to be drained. Once th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent commercial commodity emerged as a result of the process applied by it to the used lubricating oil for removing impurities to make it re-usable, because despite the removal of impurities, lubricating oil continued to be lubricating oil. In support of this contention, reliance was placed on the decision of the Supreme Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827. The case of the Revenue before the Tribunal, on the other hand, was that the process undertaken by the assessee being quite elaborate, as a result of which the lubricating oil which had became unusable after use became fit for re-user, it amounted to "manufacture". The re-refined lubricating oil, according to the Revenue, was liable to be regarded as a manufactured product and the sales thereof taxable under the Act, more so, in view of the insertion of Explanation II in the definition of "manufacture" in section 2(17) of the Act with retrospective effect. The Tribunal did not accept the contention of the Revenue that the process of re-refining the used lubricating oil to make it usable again as a lubricating oil amounted to a process of manufacture even under the amended definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le C.-There shall be levied a sales tax on the turnover of sales of goods specified in Schedule C at the rate set out against each of them in column 3 thereof, but after deducting from such turnover- (i) resales of goods on the purchase of which the dealer is liable to pay purchase tax under section 14; (ii) resales of goods, purchased by the dealer on or after the appointed day from a registered dealer, otherwise than on a declaration furnished under section 11 or 12, if the requirements of section 12A are satisfied;" (Emphasis supplied) "Resale", has been defined in clause (26) of section 2 of the Act to mean: "a sale of purchased goods (i) in the same form in which they were purchased, or (ii) without doing anything to them which amounts to, or results in a manufacture". "Manufacture" has been defined in clause (17) of section 2 in the following terms: "manufacture", with all its grammatical variations and cognate expressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise Here italicised. processing, treating or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods from the furniture purchased. This clearly is not the intention of the Legislature...... This provision should be interpreted in a practical and workable manner. The mere fact that the words used in the definition of 'manufacture' are very wide should not lead us to so widely interpret them as to render the provision practically meaningless and so as to treat the goods sold as different merely because some slight additions or changes are made in the goods which are purchased before they are sold. It is true that under the section it is not necessary that there should be 'manufacture' in the sense that a new commodity has been brought into existence as would have been required if that word is interpreted in its literal sense. But, at the same time, the section should be so interpreted to mean only such of the various process referred to in the definition and applied to the goods as are of such a character as to have an impact on the nature of the goods". (Emphasis supplied) The Supreme Court read down the scope of the words used by the Legislature in section 2(17) of the Act and held that for the purposes of the definition there should be some alteration in the nature or char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive name, character or use. (ii) The true test for determining whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity, but is recognised in the trade as a new and distinct commodity. (iii) Where the commodity retains a continuing substantial identity through the processing stage, it cannot be said that it has been manufactured." 10.. Applying the above principles to the facts of the present case, it is abundantly clear that the process undertaken by the assessee on the used lubricating oil to make the same fit for reuse as lubricating oil cannot be regarded as a process of "manufacture". Nothing was manufactured as a result of the process. Lubricating oil remained lubricating oil even after processing, with the only difference that on removal of impurities, etc., by the process undertaken by the assessee it became fit for reuse as lubricating oil. Both before and after the processing, it was regarded as "lubricating oil". That being so, in our opinion, the Tribunal was fully justified in holding that the activity of converting the used waste lubricating oil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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