1992 (1) TMI 336 - HC - VAT and Sales Tax

Court affirms manufacturing process creates distinct product, denies tax exemption for second sale.

Jacob Philip Versus State of Kerala

The court upheld the decision of the Appellate Tribunal, ruling that the G.P. sheets purchased by the assessee underwent a manufacturing process, ... - Issues:Claim of exemption for second sale of G.P. sheets under Kerala General Sales Tax Act, 1963 for the assessment year 1987-88.Analysis:The petitioner, an assessee under the Kerala General Sales Tax Act, 1963, claimed exemption for the amount obtained from the second sale of G.P. sheets during the year. However, the statutory authority found that the assessee did not directly sell G.P. sheets but instead cut them into specific sizes and shapes as per customer requirements before selling them. The Appellate Tribunal, as the final fact-finding authority, determined that the G.P. sheets purchased by the assessee underwent a manufacturing process, transforming them into a commercially distinct product from the original material. The Tribunal concluded that the exemption claimed by the assessee for second sales of scheduled goods was not valid.The revision petitioner argued that cutting the G.P. sheets into various sizes did not involve a manufacturing process and that the sheets remained the same commodity. However, the Appellate Tribunal disagreed, stating that the manufacturing process undertaken by the assessee resulted in a new and distinct commodity different from the purchased sheets. The Tribunal highlighted the lack of evidence to prove that the purchased sheets were sold as they were without undergoing any transformation. Therefore, the Tribunal upheld the decision that the converted sheets were a separate commercial product.The judgment emphasized that the transformation of the G.P. sheets into different sizes and shapes constituted a change in the original commodity, leading to the emergence of a new and distinct product. The court cited established legal principles from previous Supreme Court and High Court decisions to support the conclusion that the denial of exemption in such cases was appropriate. The court found no legal error in the decision of the Appellate Tribunal and dismissed the tax revision case, affirming the denial of the claimed exemption for the second sale of G.P. sheets.In conclusion, the court upheld the decision of the Appellate Tribunal, ruling that the G.P. sheets purchased by the assessee underwent a manufacturing process, resulting in a commercially distinct product different from the original material. The judgment highlighted the legal principles guiding such cases and dismissed the tax revision case, affirming the denial of the exemption claimed by the assessee for the second sale of G.P. sheets.