Court holds conversion of plastic tubes to bags not manufacturing; sales turnover exempt from tax

The High Court ruled in favor of the assessee, holding that the conversion of plastic tubes into plastic bags did not amount to manufacturing. The Court concluded that the process did not result in a new commercially different commodity, therefore not meeting the definition of manufacturing under the law. As a result, the sales turnover of plastic bags was considered a second sale and exempt from tax. The Revenue's revision petition was dismissed, with no costs awarded to either party.

---

---

Issues:
1. Legality of the order passed by the Sales Tax Appellate Tribunal
2. Whether conversion of plastic tubes into plastic bags involves a manufacturing process
3. Whether the process of converting plastic tubes into plastic bags amounts to manufacture

Analysis:
1. The Revenue challenged the order passed by the Sales Tax Appellate Tribunal, which rejected the appeal filed by the State Government and confirmed the order passed by the first appellate authority. The questions raised were related to the legality of the Tribunal's order in light of a previous court decision.

2. The assessee, a dealer in plastic bags and covers, claimed exemption from sales tax for converting plastic tubings into plastic bags, arguing it was a second sale. The assessing authority disagreed, considering the conversion as a manufacturing process. The High Court analyzed the definition of "manufacture" and concluded that the activity of converting plastic sheets/tubings into bags did not result in a new commercially different commodity, thus not constituting manufacturing.

3. The High Court emphasized that for an activity to be considered manufacturing, the original material must undergo a transformation leading to a new and distinct product. Referring to relevant court decisions, the judgment highlighted that mere processing or changes in the article do not necessarily amount to manufacturing unless a new commodity emerges. In this case, the process of converting plastic sheets into bags did not create a new commercial commodity, leading to the conclusion that it did not involve manufacturing.

Overall, the High Court ruled in favor of the assessee, rejecting the Revenue's arguments and upholding that the conversion of plastic tubes into bags did not constitute manufacturing. As a result, the sales turnover of plastic bags was considered a second sale and deemed exempt from tax under the Act. The revision petition was dismissed, with costs not awarded to any party.

---