TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>High Court affirms tax assessment on agarbathi purchase turnover, deems manufacturing process transformative.</h1> <h3>Mahendra Perfumery Works Versus State of Karnataka</h3> Mahendra Perfumery Works Versus State of Karnataka - [2000] 118 STC 74 (Kar) Issues:1. Assessment of tax on purchase turnover in raw agarbathis.2. Interpretation of section 6 of the Karnataka Sales Tax Act, 1957.3. Application of the test for determining consumption in the manufacture of another product.4. Challenge to the assessment by the assessee.Analysis:The judgment by the Karnataka High Court involved a case where the assessee-firm, engaged in manufacturing and dealing in agarbathis, was assessed for tax on its purchase turnover in raw agarbathis for the year 1975-76. The firm contested this assessment before the Deputy Commissioner of Commercial Taxes and the Tribunal, but both upheld the assessment. The disputed turnover pertained to purchases of raw agarbathis from unregistered dealers, which were further processed by the assessee to create scented agarbathis for marketing. The assessing officer applied section 6 of the Karnataka Sales Tax Act, 1957, to tax the purchase turnover.The assessee argued that the raw agarbathis purchased did not undergo significant change or consumption in the manufacturing process, as they were merely coated with scent before being marketed. The assessee relied on a Supreme Court decision to support this claim. However, the High Court disagreed, emphasizing the test for determining consumption in the manufacture of another product. The court highlighted that a commodity is considered to be consumed in manufacturing when it undergoes changes that result in a new and distinct article. In this case, the raw agarbathis purchased were transformed into scented agarbathis through processing, making them a different commercial product. Therefore, the court concluded that the original goods were indeed consumed in the manufacturing process, justifying the tax assessment.Ultimately, the High Court dismissed the revision petition by the assessee, affirming the decisions of the lower authorities. The court found that the authorities had correctly applied the provisions of section 6 of the Karnataka Sales Tax Act, 1957, to tax the purchase turnover in raw agarbathis. The petition was rejected, and no costs were awarded in the case.
TaxTMI 
TaxTMI 
