Broad definition of manufacture under Kerala VAT leaves honey processing exemption to fresh Tribunal reconsideration

Processing of honey may qualify as manufacture under the Kerala Value Added Tax Act where the activity involves filtering, settling, pre-heating, purification and packing, because the statutory definition of manufacture is broad and covers processing and related incidental or ancillary steps. The Court noted that the Tribunal had acted on an inadequate evidentiary record regarding the nature of the processing, while additional documents were later produced. The exemption question under entry 55(20) of the First Schedule was therefore remitted to the Tribunal for fresh decision after considering the materials and hearing both sides.

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Issues: Whether the processing of honey undertaken by the petitioner amounted to manufacture so as to qualify for exemption under entry 55(20) of the First Schedule to the Kerala Value Added Tax Act, 2003.

Analysis: The definition of manufacture under section 2(xxvi) of the Kerala Value Added Tax Act, 2003 is wide and includes producing, making, extracting, altering, finishing, assembling, processing, treating or adapting goods, as well as processes incidental or ancillary to such activities. The materials placed before the Court indicated that the petitioner claimed to subject raw honey to filtering, settling, pre-heating, purification and packing, and asserted that expenses were incurred towards such processing. Since the Tribunal had proceeded on the absence of adequate evidence regarding the nature of processing, and additional documents were produced before the Court, the correctness of the finding required fresh consideration by the Tribunal.

Conclusion: The matter relating to exemption eligibility of honey was remitted to the Tribunal for fresh decision after considering the materials and giving the parties an opportunity of hearing.

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