Turnover and manufacture under sales tax law: London sales counted, but bristle processing was not manufacture.

London sales were treated as part of the assessee's turnover in Uttar Pradesh for fixing gross turnover and tax liability, following the reasoning adopted in the connected reference. The assessee's bristle operations of cleaning, washing, sorting, bundling and trimming were not regarded as manufacture because they did not create a commercially different article or give the goods a new form, property or quality. The definition of manufacturing process in the Factories Act was held to be unhelpful for construing the sales tax provision. Accordingly, the London sales were includible in turnover, but Explanation II(ii) to section 2(h) of the U.P. Sales Tax Act did not apply to the bristle processing.

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Issues: (i) Whether the sales made by the assessee at London were includible in the sales made in Uttar Pradesh for fixing gross turnover and tax liability; (ii) Whether the assessee's dealings in bristles amounted to manufacture so as to attract Explanation II(ii) to section 2(h) of the U.P. Sales Tax Act.

Issue (i): Whether the sales made by the assessee at London were includible in the sales made in Uttar Pradesh for fixing gross turnover and tax liability.

Analysis: The answer was governed by the earlier decision delivered the same day in the connected reference, and the same reasoning was adopted for the present cases.

Conclusion: The question was answered in the affirmative.

Issue (ii): Whether the assessee's dealings in bristles amounted to manufacture so as to attract Explanation II(ii) to section 2(h) of the U.P. Sales Tax Act.

Analysis: The assessee only cleaned, washed, sorted, bundled and trimmed bristles bought from others. Those operations did not produce a commercially different article, nor did they give the bristles a new form, property or quality. The reference to the definition of manufacturing process in section 2(k) of the Factories Act, 1948, was held to be of no assistance in construing the sales tax provision.

Conclusion: The assessee was not a manufacturer, and Explanation II(ii) to section 2(h) did not apply.

Final Conclusion: The reference was answered by holding that the London sales formed part of the turnover, but the bristle processing did not amount to manufacture for sales tax purposes.

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