2010 (10) TMI 948 - HC - VAT and Sales Tax

Manufacture of ribbed bar from iron scrap constitutes under sales tax act

Commissioner of Sales Tax, Madhya Pradesh (now Chhattisgarh) Versus Jisco Enterprises

The court upheld the Tribunal's decision that the process of drawing ribbed bar from iron scrap constitutes manufacture under the M.P. General Sales Tax ... Whether the Tribunal was justified in holding that the drawing of ribbed bar from iron scrap amounted to manufacture when the dealer got the process done by others? Whether the Tribunal was justified in relying upon a decision of the Tribunal dated November 22, 1991 in Appeal No. 111-III/89 which is actually the opinion of only one Member of the Division Bench? Held that:- We answer the above referred first question of law in affirmation to the effect that the Tribunal was justified in holding that the drawing of ribbed bar from iron scrap amounted to manufacture when the dealer got the process done by others With regard to the second question, i.e., since the order passed by one Member appears to have been approved by the Tribunal and subsequently by this court, it is not necessary to decide the second question of law referred to us for consideration. This issue may be decided in an appropriate case. Issues:1. Whether the drawing of ribbed bar from iron scrap amounts to manufacture when the process is done by othersRs.2. Whether reliance on a decision of the Tribunal dated November 22, 1991, which is the opinion of only one Member of the Division Bench, is justifiedRs.Analysis:1. The case involved a dispute regarding the classification of the process of drawing ribbed bar from iron scrap as manufacture when done by a third party. The non-applicant claimed exemption of purchase tax on M.S. scrap converted into ribbed bar by another party. The Tribunal accepted the appeal, considering the process as manufacturing. The applicant argued that since the non-applicant got the scrap processed by another party, it did not amount to manufacture. The court referred to the definition of 'manufacture' under the M.P. General Sales Tax Act, emphasizing that the process falls under manufacture regardless of who performs it. The court upheld the Tribunal's decision, concluding that the process constituted manufacture.2. The second issue pertained to the validity of relying on a decision of the Tribunal dated November 22, 1991, which was the opinion of a single Member of the Division Bench. The court noted that the order had been approved by the Tribunal and subsequently by the court, indicating its acceptance. As there was no need to decide this issue in the present case, the court left it open for determination in a suitable scenario. The Board of Revenue found that the non-applicant indeed manufactured the ribbed bar from iron scrap, leading to the affirmation that the Tribunal's decision was justified. Consequently, the court disposed of the reference, directing the authorities to grant relief to the non-applicant in line with the Tribunal's order.