TMI Blog2007 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in the business of purchasing various spices like Cumin Seed (Jeera), Fenugreek Seeds (Methi), Cinnamon (Daichini), Caraway Seeds (Shahijeera) etc. from the registered dealers in the State of Andhra Pradesh and the said items are subjected to sales tax at the point of first sale under Entry No. 182 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as the "PGST Act, 1957"). All the said items are called 'spices'. The appellant by mixing and grinding all these spices together produces 'masala powder' which is used for enhancing the taste of food. 4. The appellant filed income-tax returns for the assessment years 1990-91, 1991-92, 1992-93 claiming exemption on the ground that the ingredients used for the preparation of 'masala powder' have already been taxed under Entry 182 of the First Schedule to the APGST Act, 1957 and as the said ingredients are chargeable only at the first sale point, the 'masala powder' is not further exigible to sales tax. The contention of the appellant was not accepted by the Commercial Taxes Officer. Being aggrieved by the order of the Commercial Taxes Officer, the appellant preferred an appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reproduce the names and details of those spices for deciding these appeals. 8. The appellant has submitted that the APGST Act, 1957 does not define the term 'manufacture'. However, it is submitted that there is no chemical or mechanical process except simple grinding and mixing involved in producing the 'masala powder'. The process does not bring about a new commodity which is differently identified in common and commercial parlance. In support of its contention, the appellant placed reliance on the judgment of this Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s. PIO Food Packers, 1 1980 Supp (1) SCC 174 and relied on the definition of 'manufacture' as enumerated in the said judgment, which reads as under: "Manufacture" implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary.... There must be transformation; a new and different article must emerge, "having a distinctive name, character or use." 9. The Court in this case held that by cutting the pineapple into slices and thereafter canning it, on adding sug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made it semi solid did not alter its character as an oil. 15. In the case of Commissioner of Sales Tax, U.P. v. M/s. Lal Kunwa Stone Crusher (P) Ltd . 1 (2000) 3 SCC 525, the question arose for adjudication before the Court was whether 'gitti', stone chips and dust continued to be stone or on crushing stone boulders into gitti, stone chips and dust different commercial goods emerged so as to attract sales tax on their sale. The Court opined that the term "stone" is wide enough to include the various forms such as 'gitti', 'kankar' and stone ballast. A similar view was taken by this Court in State of Maharashtra v. Mahalaxmi Stores 2 (2003) 1 SCC 70. 16. Reliance has also been placed on M/s. Crane Betel Nut Powder Works v. Commissioner of Customs and Central Excise, Tirupathi and Anr., 3 (2007) 4 SCC 155. In this case, the Court held that the process of manufacture employed by the appellant did not change the nature of the end product because the end product remained the betel nut. The process involved in sweetening the betel nut does not result in manufacture of a new product. The end product continues to be of original character though in a modified form. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. The Court in this case observed that it is the original product which is intended as spices and not any manufactured product. The position may be different if there had been only the mixture of coriander and chilly without any process whatsoever. Where coriander and chilly are powdered and mixed in certain proportion with or without other items, the mixture loses its original flavour and no longer retains the character as spices, even though the mixture may be one which is used in the preparation of food and for adding flavour. Thus, the Court approved the judgment of the Tribunal and held that the goods specified do not come under Item 27 and could be taxed only as general goods. 21. The respondents placed heavy reliance on a decision of this Court in Rajasthan Roller Flour Mills Association Another v. State of Rajasthan Others, (1994) Supp (1) SCC 413. In this case, there was difference of opinion amongst the High Courts in the country over the question whether wheat under Section 14(1) (iii) of The Central Sales Tax Act includes flour, Fine Wheat Flour ('maida') and Semolina ('suji'). The Karnataka and the Patna High Courts have held that it is not included, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this Court in paras 8, 9 and 11 at pages 566-568 in Raghurama Shetty's case (supra) "There is no merit in the submission made on behalf of the assessees that they bad not consumed paddy when they produced rice from it by merely carrying out the process of dehusking at their mills. Consumption in the true economic sense does not mean only use of goods in the production of consumers' goods or final utilization of consumers' goods by consumers involving activities like eating of food, drinking or beverages, wearing of clothes or using of an automobile by its owner for domestic purposes. A manufacturer also consumes commodities which are ordinarily called raw materials when he produces semi-finished goods which have to undergo further processes of production before they can be transformed into consumers' goods. At every such intermediate stage of production, some utility or value is added to goods which are used as raw materials and at every such stage the raw materials are consumed. Take the case of bread. It passes through the first stage of production when wheat is grown by the farmer, the second stage of production when wheat is converted into flour by the miller and the third ..... X X X X Extracts X X X X X X X X Extracts X X X X
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