AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2006 (11) TMI 320
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Upaj Mandi Adhiniyam, 1972 (hereinafter referred to as "the Act"). Before the High Court it was projected that the appellant is a public limited company having its registered head office at Brajrajnagar (Orissa) and has a paper manufacturing plant at Amlai in the district of Shahdol in the State of Madhya Pradesh. The appellant-company uses bamboos, wood dyes, starch rosin, talcum and several chemicals as raw materials for production of paper. The manufacturing process consists of crushing bamboos and wood pieces into pulp to which chemicals are added at a subsequent stage. Elaborate description was given how the manufacturing process takes place. It was paying without any demur the market fee to the mandi samiti whenever the appellant bought or sold any agricultural produce either within the market area or the market yard. It had never disputed the liability to pay such fee for purchase made in the area in question. No market fee is payable on the agricultural produce when they are neither bought or sold or brought into the market area for the purpose of sale. Appellant has been getting the agricultural produce from outside the State to its manufacturing unit at Amlai for being u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o take note of few provisions of the Act. "Processing" is defined in section 2(mmm). The same read as follows: "Section 2(mmm). 'Processing' means powdering, crushing, decorticating, husking, parboiling, polishing, ginning, pressing, curing or any other treatment to which an agricultural produce or its product is subjected to before final consumption." Section 19 deals with the power to levy market fee. The provision reads as follows: "19. Power to levy market fee.-(1) Every market committee shall levy market fee- (i) on the sale of notified agricultural produce whether brought from within the State or from outside the State into the market area; and (ii) on the notified agricultural produce whether brought from within the State or from outside the State into the market areas and used for processing; at such rates as may be fixed by the State Government from time to time subject to a minimum rate of fifty paise and a maximum of two rupees for every one hundred rupees of the price in the manner prescribed: Provided that no market committee other than the one in whose market area the notified agricultural produce is brought for sale or processing by an agriculturist....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed for processing certainly it cannot be liable to the levy of market fee. Both the aspects are to be read in a composite manner. To put it differently, it has to be given the cumulative effect of "bringing in" and "used for processing" to create the factum of liability. In absence of the produce being used for processing the liability cannot be saddled or fastened. While we are accepting the submission of Mr. Gupta we are not inclined to adjudicate the fact whether the petitioner is engaged in processing or not as in our considered view that lies in the realm of factual aspect and would be adjudicated by the competent authority. Needless to emphasize it would be open to the competent authority to delve upon the fact whether the produce which is brought inside the market area is used for processing and is brought for some other purpose, and take a decision. If the petitioner seeks a personal hearing the same shall be afforded to it. Mr. Saxena, learned Senior Counsel, has no objection to the aforesaid hearing given to the petitioner." Pursuant to the directions, the Additional Director, Madhya Pradesh State Agriculture Marketing Board, Bhopal, considered the matter. By order dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ernakulam v. Coco Fibres [1992] Supp. 1 SCC 290).See [1991] 80 STC 249 (SC). Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation. Naturally, manufacture is the end-result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one class to another. There may be several stages of processing, a different kind of processing at each stage. With each process suffered the original commodity experiences a change. Whenever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity; but it is only when the change or a series of changes takes the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Process in manufacture or in relation to manufacture implies not only the production but also various stages through which the raw material is subjected to change by different operat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ability to duty is attracted. Etymologically the word "manufacture" properly construed would doubtless cover the transformation. It is the transformation of a matter into something else and that something else is a question of degree, whether that something else is a different commercial commodity having its distinct character, use and name and commercially known as such from that point of view is a question depending upon the facts and circumstances of the case. (See Empire Industries Limited v. Union of India [1985] 3 SCC 314 See [1987] 64 STC 42 (SC).). These aspects were highlighted in Kores India Ltd., Chennai v. Commissioner of Central Excise, Chennai [2005] 1 SCC 385. The stand of learned counsel for the respondents is that the levy is under two circumstances, i.e., (i) on the buying and selling of notified agricultural produce when brought within the State into the market area (ii) on the notified agricultural produce when brought from within the State or from outside the State into the market areas. The case at hand, it is submitted, relates to the second category. Had it been only that the goods notified are brought into the market area to be covered by ....