Tendu leaf procurement under statutory control does not make the collector a manufacturer or taxable seller.

Under the U.P. Sales Tax Act, 1948, a dealer collecting tendu leaves under the statutory procurement scheme was not a manufacturer. The special framework under the U.P. Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1972 and the Rules showed that the State retained control over the leaves, the purchaser collected them on behalf of the State, and the purchaser acted as an agent for the prescribed purposes. As the arrangement did not transfer ownership of the goods to the collector, the turnover from sale of tendu leaves was not liable to sales tax.

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Issues: Whether the dealer who collected tendu leaves under the statutory scheme was a manufacturer for the purposes of sales tax, and whether tax was leviable on its turnover from the sale of tendu leaves.

Analysis: The statutory definition of manufacture under the U.P. Sales Tax Act, 1948 was considered together with the special scheme under the U.P. Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1972 and the Rules framed thereunder. The scheme showed that the State retained control over tendu leaves, permitted the purchaser to collect them on behalf of the State, and treated the purchaser as an agent for the prescribed purposes. The collection of tendu leaves by the purchaser was therefore not treated as acquisition of ownership in the goods by the collector. The statutory arrangement and the agreement for sale were read harmoniously with the sales tax law.

Conclusion: The dealer was not a manufacturer and no sales tax was leviable on its turnover from the sale of tendu leaves.

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