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TMI Blog2002 (4) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... tax exemption as a "manufactured product" within the meaning of Notification S.R.O. No. 1729/93 issued by the Government of Kerala. The said notification among other things grants sales tax exemption on new SSI units in regard to manufacture and sale of products subject to certain limitations for a definite period. The petitioners are admittedly SSI units, who obtained registration from the Industries Department as such. The basic condition for claiming sales tax exemption by SSI units is that the unit is engaged in the manufacture of a product. The notification defines "manufacture" and therefore what has to be decided is whether the processes engaged by the petitioners constitute "manufacture" and whether their product, namely, "mineral water", or "drinking water", is a manufactured product to qualify for exemption under the said notification. The definition of "manufacture" contained in S.R.O. No. 1729 of 1993 is as follows: " 'manufacture' shall mean the use of raw materials and production of goods commercially different from the raw materials used but shall not include mere packing of goods, polishing, cleaning, grading, drying, blending or mixing different varieties of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able count/ml > 1000 Nil 2. MPN 3 Nil 3. E Coll 6 Nil CHEMICAL PARAMETERS ---------------------------------------------------------------------------- Sl. Parameters (in PPM) Raw Water Treated water No. (mineral water) ---------------------------------------------------------------------------- 1. Turbidity 3 NTU Nil 2. Total solids 280 180 3. Fe 0.5 0.05 4. Manganese 3 0.1 5. Arsenic 0.05 0.001 6. Lead 0.02 Nil 7. PH 7.2 7.3 8. Nitrite 0.02 Nil 9. Sulphide (as H2S) 0.07 Nil 10. Nitrate 0.02 Nil 11. Ammonia free and saline 0.01 Nil 12. Ammonia-Albuminoid 0.1 Nil 13. Sulphate 26 14 14. Chlorides 22 16 15. Alkalinity 95 82 16. Flouride 2.2 0.1 17. Oxygen absorbed 0.3 0.1 18. Hardness 94 86 --------------------------------------------------------------------------- The petitioners contend that the resultant product after the above processes can be called mineral water, the euphemism used earlier for the present "drinking water" marketed by them. 3.. The main argument is that there has been change in the commercial identity of the product, and that is sufficient to bring in the process within the meaning of "manufacture" as contained in the above definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State while supplying water for drinking purposes. The processes required for the treatment of water for making it fit for human consumption are relative and depend upon the nature and source of the original commodity. If the petitioners are able to source water from a clean source, many of the processes are unnecessary because water in its natural form from many sources is clean and potable, which otherwise the petitioners bring about by treatment. The petitioners' contention is that their product "drinking water" was in fact being sold as "mineral water" until changes were brought about in the Prevention of Food Adulteration Rules, 1955, prescribing standards for mineral water. On going through the standards prescribed for mineral water under rule 5 of the Rules under Appendix B, it includes all kinds of mineral water or natural mineral water by whatever name it is called and sold (i) natural mineral water is water clearly distinguished from ordinary drinking water because (a) it is characterised by its content of certain mineral salts and their relative proportions and the presence of trace elements or of other constituents; (b) it is obtained directly from natural or dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notification specifically excludes processes such as cleaning, blending, packing, etc., from the scope of the definition of "manufacture". Therefore I do not find that the petitioners' contention that the various processes engaged by them in the processing and bottling of drinking water, earlier marketed by them as mineral water under various brand names, amount to manufacture within the meaning of the term contained in S.R.O. No. 1729/93, and therefore the petitioners are not entitled to sales tax exemption. Since the processes engaged by the petitioners do not amount to "manufacture" as defined in the notification, there was no necessity to bring the process or the item under the negative list and the petitioners' argument that the item or process is not in the negative list also has no relevance. 5.. Lastly the petitioners relied on the decision of the Supreme Court in Commissioner of Sales Tax, U.P. v. Indra Industries [2001] 122 STC 100 and that of the Kerala High Court in Deputy Commissioner of Sales Tax v. Surya Refineries (P) Ltd. 1991 KLJ (TC) 513 for the contention that sales tax exemption once granted to the petitioners cannot be taken away without any notice to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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