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TMI Blog2004 (3) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with notification June 15, 1996 as per annexures B and C. The notifications envisage grant of exemption/deferment of sales tax on the sale of goods manufactured by a new industrial unit set up after April 1, 1996 within the State of Karnataka. Petitioner in the light of the notifications submitted an application. The Joint Director forwarded the said application to the Director of Industries and Commerce with his recommendations in terms of annexure E. Petitioner in the light of the recommendations of the Joint Commissioner sought for an opportunity to represent its case to the office of the Director. An application was filed on January 16, 1999. An opportunity was sought in terms of annexure F. Thereafter respondents rejected the request of the petitioner in terms of annexure G. Aggrieved by annexure G, petitioner filed writ petitions in W.P. Nos. 32658 and 34399 to 34407 of 1999. This court after hearing, disposed of the writ petitions in terms of annexure H. Thereafter petitioner received a notice and in response to the notice, petitioner filed his reply on May 31, 2001. Petitioner also explained personally before the State Level Committee. The State level Committee there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner at Mangalore in the given circumstances. To consider this crucial issue, facts are required to be noticed. Material facts would reveal that the petitioner has set up a manufacturing unit at Kovaya in Amreli District of Gujarat. The normal mode of transport for these markets would be by a combination of road and rail. This however, according to the petitioner, is uneconomical for long distances and is also uncertain, because of poor road conditions and congestion as well as inadequate supply of wagons. Since a captive jetty is available with the petitioner, it is proposed to transport the raw cement produced at the Kovaya plant to various units along with western coast from where the markets in the hinterland could be served. In those circumstances, based on a survey, petitioner identified Mangalore as a place for its site. Annexure A is the project report. Project parameters have been provided in clause 3.3 of the project report. Homogenisation process has been referred to in clauses 4.9 to 4.12. The clauses read as under: 4.9 Three cement homogenising silos will be installed. Each silo will be approximately 14M dia 32 M height and will have an effective capac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir activity in this State. On receipt of the same an endorsement was issued in terms of annexure G rejecting the request of the petitioner. Writ petitions were filed in this court against the said endorsement. This court directed the respondents to reconsider the matter. In the light of the order of this court petitioner made one more representation as per annexure J. Thereafter, respondents rejected the case of the petitioner in the light of the decision of the State Level Committee. The State Level Committee in its proceedings at page No. 126 has ruled that the Mangalore plant which undertakes only the activity of physical change exclusively, i.e., packing of cement, does not amount to manufacture since the manufacture should result in production of a new/different commercial commodity. Let me see as to whether the decision is correct in law in the given set of facts. Manufacture has not been defined in the notification. Concession is available only in the event of manufacture . A certificate is necessary for availing the concession. Material facts would reveal that the petitioner has a manufacturing unit at Gujarat and cement manufactured there is brought to Mangalore and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. In V.M. Salgaocar Bros. (P) Ltd. v. Commissioner of Income-tax [1996] ITR 849 (Karn); [1996] 41 Kar LJ 79 a Division Bench of this court has considered the term new industrial undertaking and also the term manufacturing process . The court rules as under (page 859 of ITR): The term 'produce' is wider in its amplitude than the term 'manufacture', for while the latter can be used only in regard to inanimate objects and articles, the former can be used even in regard to animate things and objects. The court further ruled that all 'manufacturing' or production, activities involve some process or the other but all processes need not necessarily amount to production or manufacturing of an article. It is only when a change or series of changes take the commodity subjected to such process to a point where it can no longer be regarded as the original commodity but is instead recognised as a new and a distinct article, that such a processes may be said to have resulted in a 'manufacture' or 'production' . . . In Brooke Bond Lipton India Limited v. State of Karnataka [1998] 109 STC 265 this court has ruled as under (page 266): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Government Advocate relies on the following judgments reported in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers [1980] 46 STC 63 (SC), Chowgule Co. Pvt. Ltd. v. Union of India [1981] 47 STC 124 (SC), V.M. Salgaocar Bros. (P) Ltd. v. Commissioner of Income-tax (Central), Bangalore [1996] 217 ITR 849 (Karn); [1996] 41 Kar LJ 79, and Ujagar Prints v. Union of India [1989] 74 STC 401 (SC). He contends that based on these judgments a new commodity has to come to existence for consideration of manufacture . He says that all these judgments would negative the petitioner's arguments. From these judgments what is clear to this court is that the manufacture is the end result of one or more processes through which the original commodity is made to pass. The commodity has to undergo a change and the end-product must result in a new and distinct article. It is only then the manufacture takes place. This has been reiterated by the Supreme Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) v. Pio Food Packers [1980] 46 STC 63, Ujagar Prints v. Union of India [1989] 74 STC 401 and Chowgule Co. Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess of sizing and washing may therefore at best be said to be a process but not a process which results in any production or manufacture . . . . The above reasoning holds good even for the pilot plant . . . The pilot plant was only meant to carry out some exploratory exercises with a view to finding out whether the excavation of the ore from a particular spot or a particular grade was economically viable. It did not itself result in the manufacture or production of any new article. That being so, the pilot plant can also not be said to be used in the manufacture or production of any article so as to qualify for the benefit claimed by the assessee. This judgment is a complete answer to process , manufacture arguments and to the argument of saleable commodity as pointed out by the learned Government Advocate. The homogenisation may be at best be a process but not a process which results in production or manufacture. Therefore, the respondents are right in their submission that there is no manufacture at Mangalore. The finding of the committee of no manufacture is based on facts and is supported by the decisions of both the apex court and this court. I do not find an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [2004] 134 STC 24; AIR 2004 SC 11 wherein the Supreme Court has ruled that the word manufacture used as a verb is generally understood to mean as bringing into existence a new substance. Manufacture may involve various processes. The aim of any manufacturing activity is to achieve an end-product. This judgment nails the arguments/contentions of the petitioner. There is one more reason as to why the petitioner cannot be given the concession in this case. It cannot be forgotten that the State by offering concessions, is losing substantial revenue legally due to it. The said concession is granted in the light of the availability of employment and the fixed assets, etc. In fact, in the case on hand, annexure E would show that no eligibility certificate as such is available to the petitioner on the facts of this case. The technical committee has gone into the matter in terms of the averment in para 7. These matters are essentially for the authorities to consider/decide and courts should not go into that argument unless a very strong case is made out by the petitioner dislodging a factual finding of authorities. In the case on hand looking from any angle, no such case is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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