Refining of oil as manufacture under sales tax law upheld by retrospective statutory definition

Refining crude cotton seed oil into refined oil constitutes manufacture under section 2(17) of the Bombay Sales Tax Act, 1959, because Explanation II expressly includes refining of oil. That definition was retrospectively amended by Act No. 9 of 1989 with effect from 1 January 1960, so the deeming provision applied to the relevant period. As a result, the process could not be excluded from manufacture for purposes of resale treatment and purchase tax liability, and the issue was answered against the assessee and in favour of the Revenue.

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Issues: Whether conversion of crude cotton seed oil into refined oil amounts to manufacture within the meaning of section 2(17) of the Bombay Sales Tax Act, 1959, so as to affect the assessee's claim of resale and consequent liability to purchase tax.

Analysis: The definition of "manufacture" in section 2(17) expressly includes refining of oil by Explanation II. That definition was amended by Act No. 9 of 1989 with retrospective effect from 1 January 1960, so the deeming provision applied to the relevant period. Once refining of oil was statutorily treated as manufacture, conversion of crude oil into refined oil could not be excluded from the ambit of manufacture for the purpose of the Act.

Conclusion: The conversion of crude cotton seed oil into refined oil amounts to manufacture. The question was answered in the affirmative, against the assessee and in favour of the Revenue.

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