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TMI Blog2014 (5) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... collection of differential levy under the proviso to Section 3(3) of the Tamil Nadu General Sales Tax Act. The assessment concerned in the writ petitions are all revision of assessment. As far as the assessment order relating to the assessment year 1998-99 is concerned, since the reassessment proceedings are time barred, no question arises before this Court for any consideration. 3. The above Tax Case Revision and writ petitions arise out of two independent common orders passed by the Tamilnadu Sales Tax Appellate Tribunal covering the period from 1990-91 to 1992-93 and 1993-94 to 1997-98 and 1999-2000. 4. The petitioner / assessee is a public limited company. It has two factories, one at Rajamundry in the State of Andhra Pradesh and other at Chingleput District at Chettipunyam. The factory at Chettipunyam is engaged in the manufacture of malted milk food for Horlicks. From Rajahmundry, at an intermediate stage, the product is transferred to the factory at Chettipunyam, Chengalpattu District, in the State of Tamil Nadu, wherein the assessee is stated to be carrying on activities viz., keeping the manufacturing product in bulk drums to ensure that flavour is developed, to ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 23 of the Act stood attracted. The Officer viewed that all that the assessee did was only the marketing of the manufactured product. Under the Tamil Nadu General Sales Tax Act, both are distinct activities. Consequently, he held that the transactions relating to purchase of caps would not be covered under Section 3(3) of the Act. Aggrieved by this, the assessee went on appeal before the Appellate Assistant Commissioner in respect of the assessment years 1990-91 to 1992-93. The first Appellate Authority, however, rejected the contention of the assessee, thereby confirmed the assessment. Aggrieved by the same, the assessee went on further appeal before the Sales Tax Appellate Tribunal. 6. A reading of the order of the Tribunal shows the following questions raised for its consideration:- 1. Whether any manufacturing activity is undertaken in Tamilnadu? 2. Whether purchase of bottle caps and seals can be considered as component parts of horlicks powder? 3. Whether the Horlicks by itself without packing is marketable or not? 4. Because of caps, horlicks powder becomes a new commodity or not? 5. Whether Section 3(3) is available prior to the amendment of Section 3(3) for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners from registered dealers against statutory Form XVII declaration contemplated by Rule 22(1) of the Tamil Nadu General Sales Tax Rules, 1959, when the use of Caps, seals and labels were integral to the manufacture and marketability of Horlicks powder and also having regard to the definition of manufacturer under Rule 3(h) of the Tamil Nadu General Sales Tax Rules, 1959? " 10. Learned counsel appearing for the petitioner pointed out to the provisions of Section 3(3) of the Tamil Nadu General Sales Tax Act, as it stood during the relevant assessment years as per Act 44/86 and the provisions under Section 3(3), post amendment under the Act 25/93, effective from 12.3.1993. Drawing our attention to the definition of 'manufacturer' as available under Rule 3(h) of the Tamil Nadu General Sales Tax Rules, learned counsel submitted that given the wide definition of 'manufacturer' to mean, any person who produces, prepares or makes goods for the purpose of trade and that the provisions of Section 3(3) of the Act includes packing and labelling too, the process which takes the goods to reach the marketable form would also amount to manufacturer to have the benefit of conces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate, maximum retail price and the list of ingredients. Before packing into bottles, the containers are cleaned. To eliminate dust, the bottles pass through the ultraviolet light tunnel to remove microbial contamination. Ultimately, the products are dispensed through a volumetric filler. The containers are sealed in three layers, the first layer containing paper, the second layer containing low density polyurethane, and the final layer containing aluminium to retain the shelf life of the products. 13. Considering the process thus undertaken, in the absence of any definite meaning given in the Act on 'manufacturer', one has to understand the term only through the definition of 'manufacturer' as contained in Rule 3(h) of the Tamil Nadu General Sales Tax Rules. In the background of this, the assessee contends that it is entitled to the benefit of concessional levy and there is no question of levy of penalty under Section 23 of the Act, as though the assessee had committed violation of terms under Form XVII. 14. Per contra, learned Standing counsel appearing for the Revenue placed reliance on the decisions of the Apex Court reported in 46 STC 63 DEPUTY COMMR. OF SALES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section(1), the tax payable by a dealer in respect of sale of any goods, including consumables, packing material and labels, but excluding plant and machinery, to another dealer for use by the latter in the manufacture, and assembling, packing or labelling in connection with such manufacture inside the State, for sale by him of any goods mentioned in the First Schedule, other than those falling under item 56 in Part D of the said schedule and arrack, shall be at the rate of only three percent on the turnover relating to such sale: Provided that the provisions of this sub-section shall not apply to- (a) any sale of goods falling under [items 23, 24 and 25 in part E, items 19 and 20 in Part F] and item 1 in Part H, of the said schedule; and Note : The expression "items 23, 24 and 25 in Part E, items 19 and 20 in Part F" was substituted for the expression "items 23, 24 and 25 in Part E" by Act 33 of 1994 Gazette dated 16.6.1994 Effective from 1.4.1994. (b) any sale, unless the dealer selling such goods furnishes to the assessing authority in the prescribed manner and within the prescribed period, a declaration duly filled in and signed by the dealer to whom the goods are sold con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose and use in the manufacture of goods falling under the First Schedule and that the manufactured goods are to be available for sale inside the State. 19. As already seen, there is no definition to as to the scope of the expression 'manufacture' in the Section. Hence, one can get assistance from the definition of "manufacture" as defined under Rule 3(h) of the Rules. The said definition was considered by this Court in the decision rendered in T.C.(R) 1149 of 2006 dated 20.7.2002 - THE TAMIL NADU CO-OPERATIVE MILK PRODUCERS' FEDERATION LIMITED v. DEPUTY COMMISSIONER OF CENTRAL DIVISION. The said decision was in the context of purchase of polythene films for being used in packing milk and milk products. There, the assessee purchased fresh milk; after pasteurising it, sold it as a pasteurised milk. In the context of such process done to the milk purchased, the question arose as to whether the assessee would be entitled to concessional levy on the purchase of polythene sheets. Referring to the decision reported in (2002) 125 STC 101 ASPINWALL AND CO. LTD v. COMMISSIONER OF INCOME TAX as well as to the definition of 'manufacturer' as contained in Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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