Court rules tinned fruits & vegetables not taxable under U.P. Trade Tax Act

The court ruled in favor of the applicant, determining that the sales of tinned fresh fruits and green vegetables were not liable to tax under the U.P. Trade Tax Act. The court held that the process of preservation and tinning did not amount to "manufacture," as it did not alter the identity of the goods, which remained as fresh fruits and green vegetables. Citing various legal precedents and definitions, the court emphasized that as long as the goods retained their original nature and did not transform into new commercial commodities, they should not be taxed. The court allowed both revisions, setting aside the Tribunal's orders.

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Issues:
1. Whether sales of tinned fresh fruits and green vegetables were liable to taxRs.
2. Whether the process of preservation and tinning of fresh fruits and green vegetables could be considered as "manufacture" under the U.P. Trade Tax ActRs.

Analysis:
1. The applicant argued that tinning fresh fruits and green vegetables did not result in any physical or chemical change, maintaining their original nature. They contended that the products were exempt from tax under the U.P. Trade Tax Act, supported by Notification No. 7038. The subsequent modification of the notification was used to illustrate legislative intent. The Standing Counsel, however, claimed that the preservation and tinning process created a new commercial commodity, constituting manufacture. The court examined the relevant notifications and definitions to determine that the tinning process did not alter the identity of the goods, and they remained as fresh fruits and green vegetables.

2. The court referred to various legal precedents to support its conclusion. In the case of National Industries Corporation, the repacking of grease was not considered as manufacture. Similarly, in Sterling Foods v. State of Karnataka, processing shrimps did not change the identity of the goods. The judgment in Pio Food Packers case highlighted that processing pineapple slices did not amount to manufacture. The court also considered the definition of "manufacture" under the Bombay Sales Tax Act and emphasized that any alteration in goods should impact their nature or character to be classified as manufacture.

3. Further, the court cited cases like Krishna Chander Dutta Pvt. Ltd. and Lal Kunwa Stone Crusher Pvt. Ltd. to emphasize that processing goods into different forms does not necessarily constitute manufacture. The court reiterated that as long as the goods retain their identity and do not emerge as new commercial commodities, they should not be taxed repeatedly. The judgments in cases involving dry fruits processing and crushing boulders into smaller sizes were also referenced to support the conclusion that such processes do not amount to manufacture.

4. Ultimately, the court allowed both revisions, setting aside the Tribunal's orders. It ruled that fresh fruits and green vegetables in tinned containers were not subject to tax under Notification No. 7038. The judgment emphasized that the tinning process did not alter the nature of the goods, and they continued to be classified as fresh fruits and green vegetables.

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