Cold storage is not processing of goods where preservation leaves the commodity unchanged under industrial company tests.

Preservation of stored goods in a cold storage does not amount to processing where the goods remain unchanged in nature, form, or composition. The High Court held that "processing" requires some alteration in the commodity as a result of the operation, even if the change is slight; mere preservation is insufficient. On that basis, a cold storage company cannot be treated as an industrial company under section 2(7)(c) of the Finance Act, 1973.

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Issues: Whether a company running a cold storage can be treated as an industrial company on the footing that preservation of stored goods amounts to processing of goods under section 2(7)(c) of the Finance Act, 1973.

Analysis: The expression "processing" was held to require that, as a result of the operation applied to the commodity, the commodity must experience some change. The Court applied the principle that processing may be slight, but there must be a change in the goods as a result of the operation. Running a cold storage merely preserves the goods in the same condition and does not alter their nature, form, or composition. The earlier authorities relied on by the assessee were not treated as laying down the law after the Supreme Court's exposition of the meaning of processing.

Conclusion: A cold storage does not process goods within the meaning of section 2(7)(c) of the Finance Act, 1973, and the assessee is not an industrial company on that basis.

Final Conclusion: The question referred was answered against the assessee and in favour of the Revenue, with costs left to be borne by the parties.

Ratio Decidendi: For an activity to constitute processing of goods, the goods must undergo some change as a result of the operation; mere preservation without change is not processing.

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