TMI Blog2004 (8) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing process, and therefore, tax is not payable at two stages. That was accepted by the Full Bench. The matter was taken in appeal to the Supreme Court.* The Supreme Court dismissed the appeal as no evidence was adduced by the State to show that a commercially different product is manufactured. The Supreme Court observed as follows: "Whether, the chilli powder is the result of a process of manufacture which the chillies have undergone and whether chilli powder is a commodity commercially distinct from chillies are questions of fact to answer which the party proposing that the chilli powder is also exigible to tax must place relevant evidence before the appropriate taxing authority. In the instant case, the sales tax authorities Reported in [2000] 117 STC 312 (SC) (State of Kerala v. Nambuthiris Pickle Industries). should have placed such material to establish that the chillies underwent some process or manufacture and that the end-product, namely, chilli powder, was recognised by those who dealt in it as being distinct from chillies. They did not do so." Therefore, SLP was dismissed by the Supreme Court because no evidence was adduced by the State to show that a commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be only around 65 per cent of the input." It is further stated that tamarind seed powder manufactured by the appellant is used for manufacture of cattle feed by mixing with other materials and tamarind seed as such with the shell cannot be used as cattle feed. It is also stated as follows: "10. Tamarind seed as such with the shell cannot be used as cattle feed. Tamarind seed and tamarind seed powder are treated as commercially different commodities in commercial parlance and persons who deal with it." Price of tamarind powder is much higher than the tamarind seed. In the counter-affidavit filed by the State, the process of manufacture as explained in the affidavit by the assessee is not questioned even though sale of tamarind husk was denied. Further, it is stated in paragraph 8 of the counter-affidavit filed by the State as follows: "........It is to be noted that tamarind seed whole has not specifically used as such. It is used as cattle feed only after it is powdered. In certain areas, powdered tamarind seed used as starch." Therefore, it has been admitted in the counter-affidavit that tamarind seed, as a whole, cannot be used as such and it is used as cattle fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. The analogy of paddy and rice or of wheat and wheat powder is not apt. Nobody consumes paddy as it is. Similarly, no one eats whole wheat. They are consumed after milling them into rice or flour, as the case may be. But so far as the pepper is concerned, it is used equally in whole as well as powdered form. It is for this reason perhaps that the entry in Notification No. 885-F.T. dated May 1, 1955, speaks of 'Black and white pepper whole, broken, ground or powdered or of any other form or description whatsoever'. It is equally significant that the Notification No. 1915-F.T. dated May 10, 1963, refers to these commodities 'as specified in Notification No. 885-F.T. dated 1st May, 1955'. Black and white pepper 'as specified in Notification No. 885' means black and white pepper, whether whole, powdered, broken or in any other form. So far as turmeric and turmeric powder is concerned, the position is not identical, applying the functional test. But inasmuch as turmeric is also described in Notification No. 885 in the same manner as black and white pepper and also because Notification No. 1915 refers to it with reference to the said earlier notification, we are inclined to say ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is clear definition of "manufacture" and the legislative entry also shows that tamarind seed and tamarind powder are considered differently and in the counter-affidavit it is stated that tamarind seed cannot be used as cattle feed; but, tamarind powder is used as cattle feed showing functional difference. 6.. Next decision cited by the learned Special Government Pleader is the decision reported in State of Maharashtra v. Mahalaxmi Stores [2003] 129 STC 79 wherein the honourable apex Court held that crushing of big sized stones (boulders) into small sizes (gitti) will not result in a manufacture. It was held that conversion of bigger size boulders into gitti would not amount to manufacture as no new commercial commodity comes into existence. Another decision cited is Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) v. Pio Food Packers [1980] 46 STC 63 (SC). It is of no help to the Government. That was a case where the question was where the pineapple is processed and cut into pineapple slices for the purpose of being sold in sealed cans, whether there is a consumption of original pineapple fruit for the purpose of manufacture of slices. It was held that no such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as follows: "'Manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." The apex Court in the above case held that refined oil was not covered by the expression "non-essential vegetable oils of all sorts" and conversion of vegetable oil into refined oil is a manufacturing process. 9. In Aspinwall and Co. Ltd. v. Commissioner of Income-tax, Ernakulam [2002] 125 STC 101; 2001 AIR SCW 3444, the apex Court held that conversion of raw berries into coffee beans is manufacture. In Empire Industries Limited v. Union of India [1987] 64 STC 42; AIR 1986 SC 662, the Supreme Court held that " 'Greyfabric' after they undergo the various processes of bleaching, dyeing, sizing, printing, finishing, etc., emerges as a commercially different commodity with its own price-structure, utility and other commercial incidents and that there was in that sense a 'manufacture' within the meaning of section 2(f), even as unamended". The Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Flour Mills Association v. State of Rajasthan [1993] 91 STC 408 (SC), it was held that flour, maida and suji derived from wheat are not "wheat" within the meaning of item (iii) of section 14(i) of the Central Sales Tax Act, 1956. In Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh [1981] 48 STC 411 (SC), the apex Court held that metal employed in the notification issued under the Uttar Pradesh Sales Tax Act, 1948, will not include the forms fabricated from the primary form of metals as they constitute two different distinct commodities and must be recorded as different commercial commodities. Principles were laid down by the Supreme Court as follows: ".......a word describing a commodity in a sales tax statute should be interpreted according to its popular sense, the sense being that in which people conversant with the subject-matter with which the statute is dealing would attribute to it. Words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance. That principle has been repeatedly reaffirmed in the decisions of this Court. It holds good where a contest exists between the scientific and technological conn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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