Sales tax exemption for packaged drinking water units upheld where the incentive notification did not define manufacture.

Packaged drinking water units were held entitled to sales tax exemption under G.O. Ms. No. 108 because the incentive scheme extended relief to eligible new industrial units and did not define "manufacture." The court noted that the sales tax statute separately classified ordinary water and packaged drinking water/mineral water in different schedules, showing distinct tax treatment; on that basis, the concession could not be refused merely because packaged drinking water was placed in a taxable schedule. The Kerala ruling relied on by the revenue was found inapplicable since that notification contained an express definition of "manufacture," which was absent here. The denial of exemption was therefore unsustainable.

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Issues: Whether units engaged in the production of packaged drinking water were entitled to sales tax exemption under G.O. Ms. No. 108 dated 20.05.1996.

Analysis: The incentive scheme under G.O. Ms. No. 108 was intended to grant benefits to eligible new industrial units, including sales tax relief. The expression "manufacture" was not defined in the G.O. The Court noted that the sales tax schedule under the Andhra Pradesh General Sales Tax Act, 1957 treated ordinary water separately from packaged drinking water/mineral water, placing them in different schedules and subjecting them to different tax treatment. In that context, the respondents could not deny the concession merely on the basis that packaged drinking water fell in the taxable schedule. The Court also held that the Kerala decision relied on by the respondents was inapplicable because the notification there contained an express definition of "manufacture", which was absent here.

Conclusion: The petitioner-units were entitled to sales tax exemption under G.O. Ms. No. 108, and the denial of that benefit was unsustainable.

Final Conclusion: The writ petitions succeeded, and the packaged drinking water units retained the sales tax incentive granted under the industrial policy.

Ratio Decidendi: Where an incentive notification does not define "manufacture", a tax exemption cannot be denied merely on a narrow characterization of the product, especially when the taxing statute itself distinguishes the commodity from others in separate schedules and treats it differently for tax purposes.

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