Manufactory exemption turns on dealer-controlled workshop operations and separate accounting for exempt and taxable turnover.

A workshop where karigars worked under the dealer's direct supervision and control, with raw materials and implements supplied by the dealer, was treated as a manufactory for the validating exemption under the Orissa Sales Tax framework. The earlier broader meaning of "manufacturer" was not decisive after the validating enactment; the controlling issue was whether the dealer owned or ran a manufactory. Because exempt workshop work was mixed with other work in the accounts, the exempt and non-exempt turnover had to be separated and reassessed. The assessments were therefore quashed and the matter sent back for fresh computation limited to the taxable portion.

---

---

Issues: Whether the petitioners' gold-ornament business amounted to a "manufactory" within the meaning of section 2 of the Orissa Sales Tax Validation Act, 1961, so as to sustain exemption from sales tax under the relevant notification.

Analysis: The controlling question after the validating enactment was not the earlier, broader meaning of "manufacturer" in the exemption notification, but whether the petitioners owned or ran a manufactory. The evidence showed that a group of karigars worked in the petitioners' own workshop, that raw materials and implements were supplied by the petitioners, and that the work was done under their direct supervision and control. On those facts, the workshop was a place where manufacture was carried on and therefore answered the description of a manufactory run by the petitioners for business purposes. Since the accounts relating to the work done in the workshop were mixed with those of karigars working elsewhere, the exempt and non-exempt work had to be separated for proper reassessment.

Conclusion: The petitioners were entitled to claim the benefit of the exemption for the ornaments manufactured in their workshop by the karigars working under their direct supervision and control, and the assessment had to be revised accordingly.

Final Conclusion: The sales tax assessments were quashed and the matters were sent back for fresh computation of tax confined to the non-exempt portion of the turnover.

Ratio Decidendi: A workshop in which artisans work under the dealer's direct supervision and control, with materials and implements supplied by the dealer, constitutes a manufactory owned or run by the dealer for the purpose of the validating exemption.

---