High Court: Marble Powder Manufacturing Qualifies as 'Manufacture' under Sales Tax Act

The High Court ruled in favor of the petitioner, holding that manufacturing marble powder falls within the definition of "manufacture" under the M.P. General Sales Tax Act. The refusal of the eligibility certificate for tax exemption was set aside, and the respondent was directed to grant the certificate to the petitioner. Any security deposit was to be refunded, and no costs were imposed. The petition was allowed.

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Issues:
Challenge to refusal of eligibility certificate for exemption from entry tax and sales tax based on manufacturing process definition.

Analysis:
The petitioner, a registered firm engaged in mining marble stone and manufacturing marble powder, challenged the refusal of eligibility certificate for tax exemption. The key issue was whether the activities of manufacturing marble powder constitute "manufacture" under section 2(j) of the M.P. General Sales Tax Act, 1958. The definition of "manufacture" includes any process of producing goods. The petitioner argued that crushing marble stones into powder qualifies as a manufacturing process.

The respondent cited a previous case where converting dolomite into chips and powder was not considered manufacturing. However, the petitioner distinguished this case by referencing a Full Bench decision that recognized a specific manufacturing process. Further, the petitioner highlighted a division Bench decision that breaking boulders into metal gitti constituted manufacturing. The Full Bench in another case emphasized that changing objects into marketable goods is manufacturing.

The Supreme Court's judgment in Ashirwad Ispat Udyog v. State Level Committee clarified that the definition of "manufacture" under the Act is broad and not limited to creating new articles. The Court held that even activities like cutting iron and steel scrap into pieces for saleable goods fall under the definition. In another case, Indian Poultry v. Sales Tax Officer, the Supreme Court reiterated the wide scope of the Act's definition of "manufacture."

Based on these precedents, the High Court ruled in favor of the petitioner, stating that manufacturing marble powder falls within the definition of "manufacture" under the Act. The impugned order was set aside, and the respondent was directed to grant the eligibility certificate for tax exemption to the petitioner as per the law. The security deposit, if any, was to be refunded, and no costs were imposed. The petition was allowed.

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