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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 ..... lk - 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 ASPINWALL AND CO. LTD v. COMMISSIONER OF INCOME TAX [2001 (9) TMI 3 - SUPREME Court] as well as to the definition of 'manufacturer' as contained in Rule 3(h), this Court held that the preparation or process of making goods for the purpose of trade would also be included within the meaning of 'manufacture' to qualify for concessional levy u/s 3(3) of the Act subject to condition in Section 3(3) of the Act. Thus, when the goods purchased is for the purpose of use in the preparation or a process of the goods for the purpose of trade, such preparation or process or making of the goods for the purpose of trade would also come within the meaning of 'manufacture' – There is no hesitation in holding that when the Horlicks at intermediate stage is brought from Rajahmundry to Chengalpattu Branch of the assessee Unit in Tamil Nadu, and subjected to several processes to make it a marketable commodity, the assessee can legally claim its activities in Tamil Nadu, as coming within the meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e - Thus, going by the provisions, it is evident that the tax payable in respect of any goods including consumables, packing materials and labels, would qualify for concessional levy, so long as they are 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. Bar of Limitation - For assessment order relating to the assessment year 1998-99, since the reassessment proceedings are time barred, no question arises before this Court for any consideration - Decided in favour of Assessee. - TC (R). Nos.1665, 1632 and 1619 of 2008 and W. P. Nos. 33772 to 33777 of 2007 - - - Dated:- 24-8-2012 - Chitra Venkataraman And K. Ravichandrabaabu,JJ. For the Petitioner : Mr. N. Prasad For the Respondent : Mr. R. Sivaraman Spl. G. P. (Taxes) ORDER (Order of the Court was made by Chitra Venkataraman ,J) The assessee has filed T.C.(R).Nos. 1665, 1632 and 1619 of 2008 as against the order of the Tribunal relating to assessment years 1990-91 to 1992-93, wherein the Tamil Nadu Sales Tax Appellate Tribunal confirmed the levy of penalty under Section 23 of the Tamil Nadu G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be protected to maintain its flavour and taste. The process requires careful packing which includes labelling the name to the product, manufacturing details as to the month and batch number, packing date, expiry date, best before details, maximum retail price and the list of ingredients. Before releasing the product for marketability, the bottles are examined for any defect and put through the conveyor belt to blow air into the bottles to remove any contamination in the form of dust. The processed bottles then pass through an ultra violet tunnel, by which microbial contamination is removed. Ultimately, the bottles are sealed and brought into the market. It is stated that for bringing Horlicks as a marketable commodity in the sealed container, the petitioner purchased caps and labels using Form XVII and thereby availed the benefit of concessional rate of 3% under Section 3(3) of the Act. 5. The assessee took the contention that the manufacturing activity comes to a full form only when the goods in question are packed and ready for sale. In the circumstances, purchase of bottle caps were entitled to the concessional levy. Referring to the provisions under Section 3(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the declaration given under Section 3(3) of the Act and hence, in lieu of Section 45(2)(e) of the Act, penalty was levied under Section 23(2) of the Act. Aggrieved by the same, the assessee is before this Court. 8. As far as the writ petitions are concerned, as already pointed out, these are also against the order of the Tribunal. The only difference between the Tax Case Revisions and the writ petition is that in the Tax Case Revisions filed for the assessment years 1990-91 to 1992-93, levy of penalty under Section 23 of the Act was the only issue and the present writ petitions for the assessment years 1994-95 to 1997-98 and 1999-2000 raised a further question relating to the collection of differential tax between concessional rate and the normal rate. Except for this difference in the assessment order, practically there are no differences in the facts as regards the claim of concessional levy under Section 3(3) of the Act using Form XVII for the purchase of caps and bottles. It is a matter of record that the Tribunal upheld the assessment on the differential levy but cancelled the levy of penalty under Section 16(2) and 12(3)(b) of the Act. 9. The assessee has filed these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powder and Vitamins. The product then is passed through magnetic separators to remove fine iron particles, if any. After verifying the product characteristics including BD, it is packed in polythene bags and sealed in plastic containers. One container contains 184 kgs of the product. Manufacturing process consists of wet and dry processing. While complete wet processing is done at Rajahmundry, dry process is partially carried out at Rajahmundry and remaining at Chettipunyam. He further pointed out that though malted barley provides flavour to the product, it requires maturation time for further development to reach the required flavour. To ensure that the product achieves proper aroma, they are kept in bulk drums. The samples drawn from the drums, are taken up for sensory evaluation as well as to check bulk density. The product of different bulk density are mixed together through the vibrator to reach uniform bulk density. Any lump formation is also checked by passing through vibratory sieve and hard lumps are removed from the product. Iron contamination, thereafter, is removed from the product through magnetic plates and ultimately, the product is tagged under controlled condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erential rate are justified and legal. 15. Heard learned counsel for the petitioner as well as learned standing counsel for the Revenue and perused the materials available on record. 16. Section 3(3), as it stood at the material point of time viz., 1990-91 to 1992-93, as amended under Act 44 of 1986, reads as under:- Notwithstanding anything contained in sub-section (1) or sub-section (2), the tax payable by a dealer in respect of sale of any goods, other than consumables, to another for use by the latter, in the manufacture inside the State for sale by him of any goods mentioned in the First Schedule other than those falling under items 70(b), 70(c) and 107 of the said Schedule OR involved in the execution of woks contract shall be at the rate of only four percent on the turnover relating to such sale. Note : Prior to 10.6.1987, the first proviso to section 3(3) was as follows:- (Provided that the provisions of this sub-section shall not apply to any sale unless the dealer selling the goods furnishes to the assessing authority in the prescribed manner within the prescribed period a declaration duly filled in and signed by the dealer to whom the goods are so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Rules defines 'manufacturer' as under:- Rule 3(h) 'Manufacturer' means any person who produces, prepares or makes goods for the purpose of trade; 17. As far as Section 3(3), as it stood during the material point of time relating to assessment years 1990-91 to 1992-93, is concerned, when a dealer purchases any goods, other than consumables for use in the manufacture of any goods for sale inside the State, the tax payable by a dealer in respect of such goods, other than the excluded items, would be 4%. Proviso to Section 3(3) enjoins on the assessee to produce a certificate in Form XVII to claim concessional levy. Based on this alone, the assessee would be entitled to claim concessional levy under Section 3(3) of the Act. 18. As far as the assessment year 1999-2000 is concerned, in contra distinction to the provisions of Section 3(3), which related to sale of any goods other than the consumables, the amended provisions referred to sale of any goods including the consumables, packing materials and labels other than capital goods, for the grant of concessional levy. As in the earlier provisions, the only requirement is that raw materials must be used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when the Horlicks at intermediate stage is brought from Rajahmundry to Chengalpattu Branch of the assessee Unit in Tamil Nadu, and subjected to several processes to make it a marketable commodity, the assessee can legally claim its activities in Tamil Nadu, as coming within the meaning of the term 'manufacture'. Given the nature of the product and the requirements to comply with the provisions of the Weights and Measurements Act with its name and the product code and other details with labels affixed on the bottle, the entire manufacturing process gets completed only when the goods are brought to such a marketable stage. 20. As far as the decision relied on by the Revenue reported in 46 STC 63 DEPUTY COMMR. OF SALES TAX v. PIO FOOD PACKERS is concerned, the same relates to the purchase tax provisions under the Kerala General Sales Tax Act. As far as the decision reported in 6 VST 532 - CRANE BETEL NUT POWDER WORKS v. COMMR., C CE is concerned, the same has no relevance to the facts herein. Considering the absence of the definition of 'manufacture' , the liability to tax has to be seen only in terms of the definition available on the term 'manufacture' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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