TMI Blog2003 (9) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... ader appearing for the respondents. 2.. In O.P. No. 5295 of 2003 the petitioner is challenging exhibit P3 proceedings of the District Level Committee for Sales Tax Exemption disallowing the petitioner's claim for sales tax exemption of it's products and exhibit P7 order of the State Level Committee confirming the said proceedings. Even after disallowance of sales tax exemption, the petitioner did not file proper returns or remit tax dues and consequently the assessing officer issued notice proposing cancellation of registration under section 14(7) of the Kerala General Sales Tax Act, 1963 which is under challenge in W.P. (C). No. 26626 of 2003. 3.. The petitioner started commercial production in their industrial unit on Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittee in the appeal. Their decisions are based on the two judgments of this Court referred to in the impugned orders wherein this Court has held that there is no manufacturing activity in the production of bone meal. However, counsel for the petitioner pressed for sales tax exemption on crushed bones also separately. Therefore the question to be considered is whether the two products, namely, crushed bones and bone meal are entitled to sales tax exemption in terms of notification S.R.O. No. 1729 of 1993 under which exemption was claimed and disallowed. In order to appreciate whether the crushed bones and bone meal are manufactured products of the petitioner, it is necessary to look into the raw materials used, the process involved and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is loaded into the drier and kept there for three hours. The drier discharges into the disintegrater and the bones are crushed to get crushed bones as per KCPL specification. Crushed bones as per KCPL specification are separated. The rejections are further crushed to produce bone meal. 4.. Now the question is as to whether the conversion of raw animal bones into crushed bone pieces and the waste and unsuitable sizes into bone meal amount to manufacture or not. In order to decide the question, it is necessary to refer to the term manufacture as defined under the Notification S.R.O. No. 1729 of 1993 with the negative list of industries, which is as follows: 'Manufacture' shall mean the use of raw materials and productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atever name called. Counsel appearing for the petitioner contended that the raw material, namely, raw bones are commercially different from the products manufactured by the petitioner, namely, broken bones of specific dimensions and bone meal which have to be treated as manufactured products from the raw materials, namely, animal bones. Since the authorities below decided the case just based on the two decisions of this Court, counsel for the petitioner relied on the decision of the Supreme Court in Padmasundara Rao v. State of Tamil Nadu [2002] 255 ITR 147; AIR 2002 SC 1334 and contended that both the authorities below went wrong in deciding the matter based on the judgments of the High Court without discussing the factual position. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the main item of the petitioner which is crushed bones, is obtained by crushing bones, washing and cleaning the same for the purpose of supply to another industry, KCPL for use as raw material in the manufacture of other products by that industry. This process of crushing bones and making it into bone pieces of the size and dimension required for a customer is only a conversion of bone from one form to another form and that is specifically excluded from the scope of manufacture under the definition clause provided in the Notification S.R.O. No. 1729 of 1993. Apart from crushing and cleaning, the petitioner is not engaged in any other process and therefore a physical conversion of bone by breaking it into pieces does not involve any manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Act respectively are to the effect that in the crushing of bones, there is no consumption of bones in the manufacture of any product. It has been specifically held that there is no manufacture in the process of conversion of bones into crushed bones or bone meal. In any case, negative clause of the above definition that conversion of goods from one form to another form of the same goods does not involve any manufacture applies so far as the bone meal also is concerned. Bone meal is nothing but bone powder and change of physical form of same goods does not involve any manufacture in terms of the definition of manufacture contained in the notification. Therefore the decision of the State Level Committee exhibit P7, confirming the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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