TMI Blog2010 (7) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - - - Dated:- 2-7-2010 - DAGA V.C. AND KATHAWALLA S.J. , JJ. The judgment of the court was delivered by S.J. KATHAWALLA J. Heard learned counsel for the petitioner as well as learned counsel for the respondent. This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 ( the BST Act , for short) made by the Sales Tax Appellate Tribunal, Mumbai ( the Tribunal , for short) to seek the decision of this court on the following substantial question of law: Whether the Tribunal was correct in holding that the process carried on by the applicant for converting raw tobacco into chewing tobacco does not amount to manufacture within the meaning of section 2(17) of the Bombay Sales Tax Act? The facts: The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1959, requesting the Tribunal to refer certain questions of law to this court for decision. In view thereof, the above reference was made by the Tribunal raising the aforesaid question of law seeking decision of this court. Submissions: The learned counsel explained the process of manufacturing as under: 1.. Raw material: Raw tobacco is an agricultural produce which is mainly purchased by the applicant from the two States, namely, Gujarat and Uttar Pradesh. 2.. Drying under the sun: The raw tobacco is in different types of whole leaf nature in semi-soppy condition. The 3/4th varieties of whole leaf tobacco are dried under the sun initially. 3.. Analysis: Further, the whole leaf of raw tobacco is analyzed by a machine in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as under: 2. (17) 'manufacture', with all its grammatical variations and cognate expressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting any goods, but does not include such manufactures or manufacturing process as may be prescribed. Explanation I: For the purpose of this clause, the outlining, sawing, shaping, sizing or hewing of timber, shall be deemed to be manufacture. (April 22, 1988 to April 30, 1994) Explanation II: For the purpose of this clause, refining oil shall be deemed to be manufacture. (April 22, 1988 to April 30, 1994) 41D. In assessing the amount of tax payable in respect of any period by a registered dealer who manufactures g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured product from raw tobacco. Mr. Surte has submitted that the Tribunal has erred in holding that the processes of preparing chewing tobacco as explained in the case of Bell Mark Tobacco Co. [1967] 19 STC 129 (SC) and in the case of the applicant are quite different on the ground that in the case of Bell Mark Tobacco Co. [1967] 19 STC 129 (SC) the process of converting raw tobacco into jarda involved fermentation of raw tobacco over a period of time, whereas the process involved in the preparation of jarda by the applicant involved only sorting and blending and therefore, it cannot be said that the identity or character of the original commodity has been changed. Per contra Mr. V.A. Sonpal, appearing for the respondent submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is then allowed to dry for some days and then flavouring essences are sprinkled on it. The honourable Supreme Court agreed with the view of the High Court that the cumulative effect of the various processes such as soaking in jaggery water, shredding of tobacco and addition of flavouring essences to which tobacco was subjected before it was sold amounted to a manufacturing process under section 2(17) of the Bombay Act and the product sold was a manufactured product from raw tobacco. In the instant case too, the raw tobacco which is of a whole leaf nature is first exposed to sun and then dried. The raw tobacco is thereafter analyzed by machine in order to have the following products: Whole leaf tobacco Fole patti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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