TMI Blog2014 (9) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... er raw material for production of the computer stationery becomes an integral part of the product which when properly implanted to the normal paper becomes an identifiable distinct product to be used only for the purpose of computer printing and known in the commercial parlance as computer stationery. While ordinary paper may be also used for computer printing, computer stationery having distinct characters as stated above is used only for computer printing. Activity of the petitioner, involving certain processes with the aid of machines by integrating plain paper with carbon and which is perforated under certain specifications, and known in the common trade parlance as a computer stationery, would qualify as a manufacturing process. The process applied results into transformation of the two commodities of paper and carbon used as raw materials to an integrated and non-separable product assuming an identity of a different article or commodity known as computer stationery in the common trade parlance. Decided in favour of assessee. - W.P. (C) No. 4196 of 2010 - - - Dated:- 17-9-2012 - GOEL A.K. C.J. AND KOTISWAR SINGH N., J. For the Appellant : G.N. Sahewalla, MD Aslam, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pursuant to the aforesaid industrial policy of Assam, the petitioner set up a small-scale industrial unit for manufacturing finished products, namely, battery, inverter, UPS, computer continuous addicting rolls, fax rolls, printer, ribbon, etc. After completing all the necessary formalities, the petitioner applied for eligibility certificate for claim of incentives under the Industrial Policy of Assam, 1997 and claiming sales tax exemption under the Assam Industries (Sales Tax Concessions) Scheme, 1997 and Assam Industries (Tax Remission) Scheme, 2005. The petitioner states that due to changed circumstances, the petitioner modernized the industrial unit and limited its manufacturing activities to production of computer stationery which went into commercial production after expansion on April 16, 2005 and accordingly, applied for eligibility certificate under the Assam Industries (Sales Tax Concessions) Scheme, 1997, which however, has been kept pending by the authorities. The petitioner states that since the aforesaid manufacturing activities of the petitioner relating to computer stationery did not fall under any of the items under the negative list, on the bona fide be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner's unit to be an industrial unit engaged in manufacturing. The aforesaid letter dated January 27, 2009, which provides the cause of action for filing the present writ petition, may be reproduced hereinbelow for better appreciation of the issue involved. Government of Assam Office of the Commissioner of Taxes, Assam, Guwahati. No. CTS-36/(Ind.)/2008/11 Dated the 27th January, 2009 From: Shri Sanjay Lohiya, IAS Commissioner of Taxes, Assam, Dispur, Guwahati. To: The Director of Industries and Commerce, Assam, Udhyog Bhawan, Guwahati-21. Sub: Application for grant of E.C. of M/s. Dataplus info Channel, Tarun Nagar, Ghy-5 under expansion programme. Ref: DICC's Memo No. DICC/KMRP/US/EC-03/(EXPN) /587/ 05/786-89 dated April 23, 2008. Sir, With reference to the above, it is informed that an enquiry on the matter was caused through our concerned Assistant Commissioner of Taxes, Guwahati Unit C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blank master machine (iii) Plate exposing machine (iv) Rotary paper converter and printing machine (v) Multi-part collector machine with printing facility (vi) Collector machine for 5 part paper with numbering facility (vii) Shrink pack machine (viii) Strapping machine (ix) Strapping machine According to the petitioner, the following processes are involved to get the end-products of computer stationery. (i) The raw paper reels in different sizes, quality, colour, GSM are print re-sized by the duplex slitter machine (if required). (ii) The ready resized papers are subjected to side punching, horizontal, vertical perforation, zik-zak folding, numbering, logo or any other printing, if required. (iii) The ready zik-zak pack is then implanted with one time carbon roll for multipart paper, from 1+1 to 1+4 part by the collector machine. (iv) After that the packets are wrapped in paper sheets and then shrink packed through shrink pack machine to protect them from humidity. (v) These are then packed by strapping machine for dispatch after necessary printing. Therefore, according to the petitioner, the process of manufacturing computer stationery is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm amounts to manufacture as per the definition provided under the Act, we may also examine as to what is manufacture as understood in the legal parlance, for which we may refer to some of the Supreme Court decisions. One such landmark decision dealing with the expression manufacture with reference to taxation law was rendered by the honourable Supreme Court in Empire Industries Limited v. Union of India [1987] 64 STC 42 (SC); [1986] 162 ITR 846 (SC); [1985] 3 SCC 314, wherein it held that (paras 58, 59, 63 and 64 in 64 STC): 33. It may be noted that the taxable event in the context of sales tax law is 'sale'. The taxable event under the excise law is 'manufacture'. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes 'manufacture' takes place and liability to duty is attracted. Though in the facts of that case perhaps it was not necessary and as such the attention of the court was not drawn to the definition of the term 'manufacture' under section 2(f) of the Central Excise Act n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities. Is not that the manufacture of steel? I should have thought so. Take the manufacture of wool, it is wool when it is on the sheep's back; it is wool when it has passed through the process of sorting and picking which it has to go through in the mill. Is not that the manufacture of wool? I should have thought it most certainly was, although the name wool is applied to it both before the process begins and after it has ended.' . . . 43. In that view of the matter etymologically the word 'manufacture' properly construed would doubtless cover the transformation. In support of the question whether actually there is manufacture or not various documents were attempted to be utilised at the hearing of the application before us. Most of these pieces of evidence cannot be admitted at this stage but indisputably in the Indian Standard Glossary of Terms which deals with various expressions, 'bleached fabric' has been defined as a fabric which has undergone bleaching treatment and is treated by the Indian Standards Institution as something different from fabric which has not undergone the bleaching operations. Different standards are set out by the same and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of bleaching, dyeing, sizing, printing, finishing, etc., emerges as a commercially different commodity with its own price structure, custom and other commercial incidents and that there was in that sense a 'manufacture' within the meaning of section 2(f), even as unamended, is an eminently plausible view and is not shown to suffer from any fallacy. Indeed, on this point the referring Bench did not disagree or have any reservations either. It is to be noticed that if the amending law is valid, this aspect becomes academic. The aforesaid principles to hold any activity to be manufacture has been consistently followed in the subsequent decisions of the Supreme Court, viz., in Collector of Central Excise, Jaipur v. Rajasthan State Chemical Works [1991] 4 SCC 473, where it was held as follows: 11. Clause (f) gives an inclusive definition of the term 'manufacture'. According to the dictionary, the term 'manufacture' means a process which results in an alteration or change in the goods which are subjected to the process of manufacturing leading to the production of a commercially new article. In determining what constitutes 'manufacture' no hard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. Therefore, in common trade parlance the computer stationery is processed through various modes of processing as indicated hereinbefore. From the above decisions of the honourable Supreme Court, the most important attribute of any activity to be considered as manufacture is that by virtue of the process or processes involved in the said activity, the original material/commodity undergoes transformation to another commodity which acquires a distinct character, uses, and name with commercial identity. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes manufacture takes place. It is also evident that the transformation of the said commodity may involve one or several processes. What is important is that the new product must after the process must acquire a distinct character, use for the same and have a commercially known identity. In the present case, it is the contention of the petitioner that computer stationery is a result of certain mechanical processes involving machines by way of cutting, punching and horiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery becomes an integral part of the product which when properly implanted to the normal paper becomes an identifiable distinct product to be used only for the purpose of computer printing and known in the commercial parlance as computer stationery. While ordinary paper may be also used for computer printing, computer stationery having distinct characters as stated above is used only for computer printing. As can be seen from the above decision of the honourable Supreme Court in Commissioner of Central Excise, Meerut II [2011] 11 GSTR 1 (SC); [2011] 9 SCC 470, the computer stationery carries a distinct identify in the common trade parlance. Having considered the facts in the light of the decisions of the Supreme Court as discussed above, this court is of the view that the activity undertaken by the petitioner is of manufacturing of computer stationery and the aforesaid activity of the petitioner's firm is covered under the definition of manufacture provided under the Assam Value Added Tax Act and will not come within the negative list. It was the stand of the authorities that the dealer's activity essentially is of cutting paper from the paper roll, perforating th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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