TaxTMI 
TaxTMI 
2014 (9) TMI 503
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....ut various incentives, and one such incentive was giving sales tax exemption to the industries engaged in certain manufacturing activities. As per the said exemption, all new industries and existing industries going in for expansion/diversification/modernization would be granted sales tax exemption on sale of finished products and purchase of raw materials as per the scale mentioned therein. In pursuance of the aforesaid Industrial Policy, the Governor of Assam, in exercise of powers conferred by subsection (4) of section 9 of the Assam General Sales Tax Act, 1993, framed the Assam Industries (Sales Tax Concessions) Scheme, 1997 for grant of relief by way of sales tax exemption to the eligible industrial units. Subsequently, in the year 2003, the Government of Assam issued another industrial policy giving various other incentives including sales tax exemption which was granted under the earlier industrial policy. Upon enactment of the Assam Value Added Tax Act, 2003, a new scheme was introduced substituting the earlier Scheme of 1997 framed under the old industrial policy, which is known as the Assam Industries (Tax Remission) Scheme, 2005 under the Assam Value Added Tax Act, 2003....
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....Remission) Scheme, 2005, which the petitioner was entitled to receive. Subsequently, the petitioner received a notice of demand for the assessment year 2005-06 demanding a sum of Rs. 3,13,676 which comprised of an amount of Rs. 1,75,123 towards tax payable and a sum of Rs. 1,40,256 towards interest payable. On receipt of the said demand notice, the petitioner informed the assessing authority that the petitioner's application for the grant of incentives under the Assam Industries (Tax Remission) Scheme, 2005, was under consideration. However, the assessing authority by stating that the petitioner had failed to submit the eligibility and entitlement certificate in support his claim, issued a show-cause notice as to why the petitioner's turnover shall not be assessed to tax under section 37 of the Assam Value Added Tax Act, 2003 by rejecting the petitioner's claim for remission under the Assam Industries (Tax Remission) Scheme, 2005. After receipt of the aforesaid notice, the petitioner requested the Superintendent of Taxes, Unit C, Guwahati, to intimate the reasons for which the petitioner was not extended the benefit of sales tax exemption. The petitioner was later on i....
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....ion as it was not engaged in manufacture in the true sense of the term, is not sustainable. It is the contention of the petitioner that the negative list mentioned in the Assam Industries (Tax Remission) Scheme, 2005 was specifically limited to those which are mentioned therein and the same cannot be allowed to be expanded by way of inference to include other industries within the negative list. It is the case of the petitioner that the industrial unit of the petitioner is undertaking manufacturing activity of "computer stationery" which cannot be said to be an industrial unit engaged in the activity of "paper cutting from roll paper" as alleged by the authorities. It is the case of the petitioner that for the purpose of manufacturing of computer stationery, raw materials like paper reels of different sizes, GSM, color, and quality, different sizes one-time carbon, ink, other printing materials, cartoon, wrapper, polybag, etc., and other packing goods are used. According to the petitioner, for production of computer stationery, certain mechanical processes are involved in which the following machineries are required to complete the process. (i) Duplex type slitter machine. (ii....
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....r section 2(30) of the Assam Value Added Tax Act, 2003, without being included under the negative list/entry of "paper cutting from roll paper", so as to entitle the petitioner tax exemption. Section 2(30) of the Assam Value Added Tax Act, 2003 which provides an inclusive definition of the expression, "manufacture" is as follows: "2. (30) 'manufacture' includes any activity that brings out a change in an article or articles as a result of some process, treatment, labour and results in transformations into a new and different article so understood in commercial parlance having a distinct name, character use, but does not include such activity of manufacture as may be prescribed." From the aforesaid definition, any activity, to qualify as "manufacture", the following attributes must be discernible in it: (i) It brings out a change in the article. (ii) Some processes, treatment, labour must be involved. (iii) It results in transformation into a new and different article. (iv) Carries a distinct name, character, use in commercial parlance. However, before we proceed to examine whether the activity carried out by the petitioner-firm amounts to manufacture as per the defi....
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....and name and commercially known as such from that point of view is a question depending upon the facts and circumstances of the case. Plain wood is certainly different from 'box' made of wood. Rindley, J. it may be pointed out, disagreed with the view and observed at page 362 of the report that where any process of art is used upon some substance, it is 'manufactured'. He observed as follows: 'To say that a person does not "manufacture" a thing because it has the same name after the process has been passed upon it as it had before seems to me-but I suppose I am wrong-to be simply a question of words. If there had happened to be another word for saccharin of the strength of 550, different from saccharin of the strength of 330, it would almost-I will not say quite-follow from the reasoning of my learned brothers that this would have been a manufacture. I cannot think that that is so. Take the case of the manufacture of steel; and let it be steel before it goes into works: apply some process to it and it becomes a particular sort of steel. But it is steel both before and after, although steel of different qualities. Is not that the manufacture of steel? I should h....
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....ses. There might be border-line cases where either conclusion with equal justification may be reached. Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture', we are afraid, results in an oversimplification of both and tends to blur their interdependence in cases such as the present one. The correctness of the view in the Empire Industries' case [1987] 64 STC 42 (SC); [1986] 162 ITR 846 (SC); [1985] 3 SCC 314 cannot be tested in the light of materialin the form of affidavit expressing the opinion of persons said to be engaged in, or connected with, the textile trade as to the commercial identity of the commodities before and after the processing-placed before the court in a subsequent case. These opinions are, of course, relevant and would be amongst the various factors to be taken into account in deciding the question. 43. On a consideration of the matter, we are persuaded to think that the view taken in the Empire Industries' case [1987] 64 STC 42 (SC); [1986] 162 ITR 846 (SC); [1985] 3 SCC 314 that 'grey fabric' after it undergoes the various processes of bleaching, dyeing, sizing, printing, finishing, etc., emerg....
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.... effected in a product, which was not there previously, and which change facilitates the utility of the product for which it is meant, then the process is not a simple process, but a process incidental or ancillary to the completion of a manufactured product. Dealing with carbonless or self-copy paper used in computer printing, the honourable Supreme Court in the case of Commissioner of Central Excise, Meerut II v. Sundstrand Forms P. Ltd. [2011] 11 GSTR 1 (SC); [2011] 9 SCC 470, held that (page 3 in 11 GSTR): "6. There is also no dispute with regard to the fact that the carbonless paper or self-copy paper emerges at the intermediate stage and has its own life but the same could be further used in the manufacture of stationery in continuous process. There is also no dispute with regard to the fact that the carbonless paper is a well-known marketable commodity as is evident from the process of manufacturing. The carbonless paper or other paper cannot be treated as the computer stationery unless it is subjected to the second stage of processing, i.e., the process of perforation, punching and fan-folding, etc. Therefore, in common trade parlance the computer stationery is processed ....
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....y perforated so that the continuous paper can be folded and torn off. Therefore, unless such paper is subjected to such perforation with certain specifications, the same cannot be used as computer stationery. In the case of Commissioner of Central Excise, Meerut II [2011] 11 GSTR 1 (SC); [2011] 9 SCC 470, the honourable Supreme Court also held that the paper cannot be treated as a computer stationery unless it is subjected to the process of perforation, punching and fan-folding, etc., and in common trade parlance, a computer stationary is processed through various methods of processing. In the said case, the honourable Supreme Court was considering the computer stationery of carbonless paper. In the present case, from the records, it is seen that the petitioner was engaged in the manufacturing of computer stationery with carbon. The carbon papers are attached to the plain papers and thereafter perforated with necessary specifications and the end-products are papers with carbon for the use by the computer. The carbon element, which is another raw material for production of the computer stationery becomes an integral part of the product which when properly implanted to the normal ....