1986 (2) TMI 311 - HC - VAT and Sales Tax

Concrete mix not 'manufacture of goods' for purchase tax; activity must create marketable commodity

The Court held that the concrete mixture produced by the assessee did not qualify as 'manufacture of goods' for purchase tax purposes as it was not a ... - Issues:Interpretation of the expression 'uses them within the State in the manufacture of goods' in section 13 of the Bombay Sales Tax Act, 1959.Determination of whether an activity must result in a marketable commodity to constitute manufacture.Detailed Analysis:Issue 1: Interpretation of the expression 'uses them within the State in the manufacture of goods'The case involved references under section 61(1) of the Bombay Sales Tax Act, 1959, regarding the liability of an assessee who purchased sand from unregistered dealers and used it in mixing with cement and metal to produce concrete mixture. The Tribunal concluded that the concrete mixture was not a marketable commodity and thus not subject to purchase tax under section 13 of the Act. The Court analyzed the definition of 'manufacture' under sub-section (17) of section 2, which includes various processes but excludes processes prescribed otherwise. The Court considered the submissions made and referred to relevant provisions of the Act to determine the applicability of purchase tax in this scenario.Issue 2: Requirement of a marketable commodity for an activity to amount to manufactureThe Court examined the argument presented by the counsel, emphasizing that the activity of mixing sand with cement, metal, and water resulted in the creation of a distinct commodity, i.e., concrete mixture. The counsel relied on a previous decision involving the processing of raw film to support the contention that the goods produced need not be commercially marketable to constitute manufacture. However, the Court distinguished this case from the current scenario where the concrete mixture was not considered a commercial commodity but rather a product used immediately in the building construction process. The Court referred to the decision in Commissioner of Sales Tax v. Dunken Coffee Mfg. Co. to establish the principle that for an activity to amount to manufacture, it must result in a different commercial article or commodity, which was not the case with the concrete mixture produced by the assessee.Conclusion:The Court answered the first question in the affirmative, indicating that the concrete mixture produced did not fall under the expression 'uses them within the State in the manufacture of goods' for the purpose of purchase tax. The second question was answered in the negative, highlighting that the activity did not result in a marketable commodity and therefore did not constitute manufacture. The judgment favored the assessee, and the revenue was directed to pay the costs of the references.