TMI Blog2016 (1) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the Petitioner is as follows:- a. The Petitioner is a registered dealer under the Tamil Nadu General Sales Tax Act, 1959 and is engaged in the business of construction activities. The Petitioner was granted quarry lease for a period of 10 years by proceedings dated 22.02.2008 for an extent of 5.00 hectares, which is a Government poramboke land, in SF.No.102/6 (Part) of Gajjelnaickenpatty Village, Salem Taluk and an indenture dated 23.4.2009 was entered into with the Government, thus, the Petitioner became entitled to get rough stone, cut stone, chakkai and jelly from the said leased land. Under Regulation 106(2) of the Metalliferrous Mines Regulations, 1961, permission for deep hole blasting was obtained by proceedings dated 6.9.2011. The Petitioner has also registered under the Factories Act, 1948. b. According to the Petitioner, for the purpose of quarrying operations, crushing plants, excavators and front end loaders and its spare parts and accessories are purchased within the State as well as from other States against Form C under the Central Sales Tax Act, 1956. However, the Input Tax Credit was availed only on the capital goods, parts and accessories purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the Petitioner further contended that the Respondents failed to appreciate the definition of 'manufacture' under Section 2(27) of the Act and therefore, the levy of tax and penalty is unwarranted, since the Petitioner had not wrongly availed Input Tax Credit and prayed for quashing of the impugned orders. The learned counsel for the Petitioner also relied upon the judgments reported in 1956 7 STC 626 (The State of Bihar Vs. Chrestien Mica Industries Ltd), 1957 8 STC 294 (G.R.Kulkarni Vs. The State), 1961 12 STC 150 SC (Chrestien Mica Industries Ltd Vs. The State of Bihar), 1980 6 ELT 343 SC (Deputy Commissioner of Sales Tax (Law), Ernakulam Vs PIO Food Packers) ,1990 79 STC 149 (Kher Stone Crusher Vs. General Manager, District Industsries Centre, Jabalpur), 1992 87 STC 339 (State of Tamil Nadu Vs. O.P.Aliyar), 2000 118 STC 287 SC (Commissioner of Sales Tax, UP Vs. Lal Kunwa Stone Crusher (P) Limited), 2001 122 STC 594 (State of Tripura Vs. Manoranjan Chakraborty and others) and 2004 271 ITR 331 (Commissioner of Income Tax Vs. Sesa Goa Ltd) in support of his contentions. 4. The learned Additional Government Pleader for the Respondents submitted that as the Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be notified by the Government. 8. It is also relevant to refer to Section 2 (11) of the TNVAT Act, which deals with Capital Goods, as under:- Section 2(11):- Capital Goods means, - (a) plant, machinery, equipment, apparatus, tools, appliances or electrical installation for producing, making, extracting or processing of any goods or for extracting or for bringing about any change in any substance for the manufacture of final products; (b) pollution control, quality control, laboratory and cold storage equipments; (c) components, spare parts and accessories of the goods specified in (a) and (b) above; (d) moulds, dies, jigs and fixtures; (e) refractors and refractory materials; (f) storage tanks; and (g) tubes, pipes and fittings thereof used in the State for the purpose of manufacture, processing, packing or storing of goods in the course of business excluding civil structures and such goods as may be notified by the Government; 9. It is evident from Section 2 (11) that there is only a generalisation of machineries and its spares. It does not name the goods. The definition only specifies that the goods, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er designated size. The size therefore determines the skill necessary to fashion the stone. In -- 'Kent v. Astley', (1869) 5 QB 19 (D), Cockburn, C. J., dealing with the case of preparing slates after quarrying said that it was a manufacturing process. There also the slate blocks which were won were merely split into sheets with the use of a hammer and chisel or wedges. The entire process was manual. We do not see any distinction between the fashioning of slate from a block and the fashioning of a graded size metal from a big block or boulder of stone. The essential condition is the same, viz., that there is an expenditure of some skill in fashioning an object of a different size and shape, ready for a commercial deal. In the present case, the man who manufactures metal is manufacturing a new article which has got a different price and that price includes the labour which goes into its manufacture. 6. We are satisfied, therefore, that the process indulged in to shape stones into metal is a manufacturing process and therefore the assessee was within definition (i) of Section 2 of the Act. We only pause to say that the position has now been cleared by the introduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After sorting stage the mica is in three forms, block mica, chillas and waste, block mica is the dressed, graded and qualified product, varying in thickness from eight to thirty mils. The superior qualities of the block mica and the bigger sizes of the inferior qualities are largely exported as such. The chillas are thin sheets of mica, less than eight mils thick, removed in the course of processing and qualifying mica. With the block, which is not exported as such, they undergo further processing into splittings, wrappers, condenser films, condenser plates, washers and discs. Neither of the words 'production' or 'manufacture' is defined in the Bihar Sales Tax Act, but according to the Oxford English Dictionary, 'production' means amongst other things that which is produced, a thing that results from any action, process or effort, a product; a product of human activity or effort. It is obvious that what is described in the report above quoted would fall within the dictionary meaning of the word 'production'. It is unnecessary to decide what the word 'manufacture' means. As what was sold was mica produced in Bihar by the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of the labour put into making the fruit more readily consumable and because of the can employed to contain it. It is not as if the higher price is claimed because it is a different commercial commodity. It is said that pineapple slices appeal to a different sector of the trade and that when a customer asks for a can of pineapple slices he has in mind something very different from fresh pineapple fruit. Here again, the distinction in the mind of the consumer arises not from any difference in the essential identity of the two, but is derived from the mere form in which the fruit is desired. Learned counsel for the Revenue contends that even if no manufacturing process is involved, the case still falls within s. 5-A(1) (a) of the Kerala General Sales Tax Act, because the statutory provision speaks not only of goods consumed in the manufacture of other goods for sale but also goods consumed otherwise. There is a fallacy in the submission. The clause, truly read, speaks of goods consumed in the manufacture of other goods for sale or goods consumed in the manufacture of other goods for purposes other than sale. 8. In the result, we hold that when pineapple fruit is processed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7A of the Act that the process under which the bigger stone boulders were converted into smaller stones of varying sizes and blue metal jelly thus obtained was manufacture using stones for the creation and preparation of blue metal jelly. Recounting of the entire ordeal of the assessee of going through every stage of the legal proceeding until the appeal before the Tribunal is not necessary. The Tribunal, however, had in a short, but effective, order held that the process of converting the bigger stone boulders into smaller stones of varying sizes is not a manufacture through which blue metal jelly is obtained. The Tribunal has referred to a decision in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) v. Pio Food Packers [1978] 41 STC 364 (Ker) and other authorities on the subject. Corpus Juris Secundum, volume 55, at page 685, explained the term manufacture thus: In determining whether an activity is or is not a manufacture, or whether a process or operation is or is not manufacturing, one of the important factors is the extent of the change that has been effected in the original material, since, while every change in an article is the result of treatment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctly understood the law and rightly held that all the ingredients of section 7-A are not satisfied in the case of blue metal jelly obtained in the process of crushing of stone boulders and conversion into smaller stones of varying sizes. There is no merit in this tax case. It is accordingly dismissed. There will be no order as to costs. 17. In 2000 118 STC 287 SC (Commissioner of Sales Tax, UP Vs. Lal Kunwa Stone Crusher (P) Limited), it has been held as under:- 4. Here in the present case, the goods that are brought into taxation are enumerated in Entry 40 of the notification dated September 7, 1981 to which we have adverted to earlier. Each one of the items enumerates various goods, which could be brought to tax. The purpose of sales tax is to levy tax on sale of goods of each variety and not the sale of the substance out of which they may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately, taxable goods for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing, they may remain commercially the same goods which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. It is, therefore, not necessary, as has been sought to be contended by learned counsel for the Revenue, that the mined ore must be a commercially new product. The decisions and other authorities on the definition of the word ore , as cited by the appellant, are irrelevant. Learned counsel appearing on behalf of the assessee, correctly submitted that the other provisions of the Act, particularly Section 33(1)(b)(B) r/w item No. 3 of the Fifth Schedule to the Act, would show that mining of ore is treated as production . Section 35E also speaks of production in the context of mining activity. The language of these sections is similar to the language of Section 32A(2). There is no reason for us to assume that the word production was used in a different sense in Section 32A. We are, therefore, of the opinion that extraction and processing of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of the substance out of which they may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately, taxable goods for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing, they may remain commercially the same goods which cannot be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type. We are fortified in this view by the decision in State of Tamil Nadu v. PyareLalMalhotra, [1978] 2 SCC 552. What is to be seen in the present case is whether stone gitti, chips, etc. continue to be identifiable with the stone boulders, which have been bought by the dealer. 21. In the present case, however, stone, as such, and gitti and articles of stones are all of similar nature though by size they may be different. Even if gitti, kankar, stone-ballast, etc. may all be looked upon as separate in commercial character from stone boulders offered for sale in the market, yet it cannot be presumed that Entry 40 of the notification is intended to describe the same as not stone at all. In fact the term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 (27) of the Act. Also, it has been brought to the knowledge of this Court that though the Petitioner has claimed to have substantiated its claim by producing documentary evidence, no such documents were submitted. Therefore, it would only be appropriate for the Petitioner to approach the appellate authority where the factual aspects can be gone into. 25. The learned counsel for the Petitioner has relied upon the judgment in 2001 122 STC 594 SC, on the maintainability of the writ petition to contend that the availability of the alternative remedy is not a bar. In the said judgement, it has been held as under:- 4. For the reasons contained in the said decisins, we hold that the impugned provisions are valid. It is, of course, clear that if gross injustice is done and it can be shown that for good reason the court should interfere, then notwithstanding the alternative remedy which may be available by way of an appeal under Section 20 or revision under Sectio 21, a writ court can in an appropriate case exercise its jurisdiction to do substantive justice. Normally of course the provisions of the Act would have to be complied with, but the availability of the writ jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it, as distinct in identity from the commodity involved in its manufacture. The apex court in the case of South Bihar Sugar Mills Vs. Union of India, AIR 1968 SC 922, it was held that the word manufacture implies a change but every change in the raw material may not be brought about by manufacture; there must be such a transformation that new and different article must emerge from the manufacture having a distinctive name, character or use. It was also held in the case of State of Tamilnadu Vs. O.P.Aiyar (1992) reported in 87 STC 339(Mad) it was held that when blue metal jelly obtained in the process of crushing of stone boulders and converted in to smaller stones of varying sizes, there is no manufacturing process involved . Following this principles, the contention of the appellants that there is manufacturing activity at the hands of the purchasers of the machinery sold by the appellants, is not acceptable. Section 2(11) defines capital goods, as the plant and machinery used for manufacture, the result of which emerges a change in any substance for the manufacture of final products. Considering the statutory position of law in the case of the appellant, I find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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