2017 (4) TMI 8 - HC - VAT and Sales Tax

Tribunal Decision Upheld on Manufacturing Process; Appeal Dismissed

The High Court upheld the tribunal's decision that the process carried out on the goods did not amount to manufacturing, supporting the respondent's claim ... CST - penultimate sale against form H - The Assessing Officer denied the sales against Form “H” on the ground that the after the exporter purchased the goods in question from the respondent-dealer the same was not sold by the exporter in the form in which it has been purchased from the respondent and after undertaking same process on it, goods came to be sold, which amounted to manufacture and resultantly the tax demand at the rate of 10% on the said sales - Held that: - the controversy in the present Tax Appeal is squarely covered against the revenue in view of the the decision of the Division Bench of this Court in the case of State of Gujarat Vs. Ambica Agro Product [2016 (10) TMI 857 - GUJARAT HIGH COURT] by which in the similar set of facts and circumstances the Division Bench has held that the respondent is entitled to the claim under Form “H” and has held that the process carried out by the exporter cannot be said to be manufacture - the process carried out by the exporter cannot be said to be manufacture, and therefore, the claim of the respondent of sale against Form “H” is allowable - appeal dismissed - decided against appellant. Issues:1. Whether the goods on which process carried out amounts to manufactureRs.2. Whether Section 5(3) of the Central Sales Tax, 1956 applies in the present caseRs.Analysis:Issue 1:The appellant challenged the order of the Gujarat Value Added Tax Tribunal, which allowed the respondent's appeal regarding the denial of sales against Form 'H' due to the process carried out on the goods. The Assessing Officer contended that the process amounted to manufacture, justifying a tax demand of 10%. The appellate authority upheld a tax liability of Rs. 58,80,709. However, the tribunal overturned these decisions based on a previous judgment in a similar case. The High Court noted that a Division Bench decision supported the respondent's claim under Form 'H' and clarified that the process by the exporter did not constitute manufacturing. As there was no error in the tribunal's decision, the appeal was dismissed.Issue 2:The High Court emphasized that a previous Division Bench ruling in a similar case had established the respondent's entitlement to the claim under Form 'H.' The court highlighted that the process conducted by the exporter did not meet the definition of manufacturing. The appellant failed to provide any contradictory decisions to the Division Bench's judgment. Consequently, the court found no substantial question of law in the present appeal, leading to its dismissal. Additionally, a related civil application for substituted service was also dismissed following the main appeal's outcome.