TaxTMI 
TaxTMI 
1995 (2) TMI 401
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....ee purchased big size stones known as "boulders" from registered dealers and with the help of crushing machine converted the same into stones of smaller sizes, known as "gitti". He applied to the Commissioner of Sales Tax under section 52(b) of the Bombay Sales Tax Act, 1959 ("Act") for determination of the question whether the process of crushing stones of bigger sizes known as boulders into "gitti" would amount to "manufacture". The Deputy Commissioner, who took up the determination, held it to be a process of manufacture within the meaning of section 2(17) of the Act. Against the above order, the assessee appealed to the Maharashtra Sales Tax Tribunal ("Tribunal"). The contention of the assessee before the Tribunal was that the process of crushing boulders into stones of smaller sizes known as "gitti" did not amount to manufacture within the meaning of section 2(17) of the Act, inasmuch as no new commercial commodity, different and distinct from the boulders which were crushed, emerged as a result of the said process. The Tribunal accepted the contention of the assessee and held that crushing of stones does not amount to manufacture. Hence this reference at the instance of the R....
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....rchases certain goods and merely adds some decorative material thereto, according to the State's interpretation, there will be a 'manufacture'. For instance, if a car is purchased and some lights or some special gadgets are added thereto, the interpretation will result in rendering the resale of the same car the resale of a different commodity. Again, if a piece of furniture is sold in a dismantled condition and the distributor puts the parts together and sells it, the definition, if construed as widely as interpreted by the State, can be said to amount to manufacture and render the furniture sold a different item of goods from the furniture purchased. This clearly is not the intention of the Legislature..... This provision should be interpreted in a practical and workable manner. The mere fact that the words used in the definition of 'manufacture' are very wide should not lead us to so widely interpret them as to render the provision practically meaningless and so as to treat the goods sold as different merely because some slight additions or changes are made in the goods which are purchased before they are sold. It is true that under the section it is not necessary that there ....
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....tation is given, it may lead to impractical consequences.........." 6.. The ratio of the above decision is clear: Only such of the processes referred to in section 2(17) of the Act and applied to the goods as are of such a character as to have an impact on the nature of the goods could be regarded as "manufacture". To the same effect is the decision of the Supreme Court in Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63 where it was held that it is only when the change, or a series of changes take a commodity to a point where commercially it can no longer be regarded as the original commodity but instead recognised as a new distinct article that a manufacture can be said to take place. The same test was applied by the Supreme Court in Chowgule & Co. Pvt. Ltd. v. Union of India [1981] 47 STC 124 to decide whether blending of different qualities of ore to produce ore of the contractual specifications involved any process of manufacture and in Sterling Foods v. State of Karnataka [1986] 63 STC 239 to decide whether the process of cutting of heads and tails, peeling, deveining, cleaning and freezing of lobsters amounted to a process of manufacture. In both t....
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....e C to the Act or they are regarded as two distinct and different commodities. Applying the tests laid down by the Supreme Court, it is obvious that the process of crushing boulders to obtain stones of smaller sizes termed as "gitti" cannot be regarded as a process of manufacture. The taxable item is "stone". Boulders and "gitti" are different sizes of the same. Breaking of boulders, which are pieces of stones of bigger size, into pieces of relatively smaller size known as "gitti" does not alter the nature and character of stone. They remain stone, which falls under entry 25 of Part II of Schedule C to the Act which, so far as relevant, reads: Serial No. Description of goods Rate of sales tax Rate of purchase tax 1 2 3 4 25. (i) Building materials including lime, sand, stone, rubble, refractory bricks but excluding those specified elsewhere. 8 paise in the rupee 8 paise in the rupee 9. The admitted position is that boulders are "stone" falling under the above entry. In our opinion, such stones do not cease to be stones, merely by reason of the fact that they have been reduced in size by the process of crushing or breaking. The process of crushing, therefore, ca....