TaxTMI 
TaxTMI 
2007 (7) TMI 3
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....sh and the said items are subjected to sales tax at the point of first sale under Entry No. 182 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as the "PGST Act, 1957"). All the said items are called 'spices'. The appellant by mixing and grinding all these spices together produces 'masala powder' which is used for enhancing the taste of food. 4. The appellant filed income-tax returns for the assessment years 1990-91, 1991-92, 1992-93 claiming exemption on the ground that the ingredients used for the preparation of 'masala powder' have already been taxed under Entry 182 of the First Schedule to the APGST Act, 1957 and as the said ingredients are chargeable only at the first sale point, the 'masala powder' is not further exigible to sales tax. The contention of the appellant was not accepted by the Commercial Taxes Officer. Being aggrieved by the order of the Commercial Taxes Officer, the appellant preferred an appeal before the Appellate Deputy Commissioner, which was rejected. Thereafter, the appellant filed an appeal to the Sales Tax Appellate Tribunal (for short 'the Tribunal'). The Tribunal also rejected the appeal. The Tribuna....
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....s no chemical or mechanical process except simple grinding and mixing involved in producing the 'masala powder'. The process does not bring about a new commodity which is differently identified in common and commercial parlance. In support of its contention, the appellant placed reliance on the judgment of this Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s. PIO Food Packers, ^11980 Supp (1) SCC 174 and relied on the definition of 'manufacture' as enumerated in the said judgment, which reads as under: "Manufacture" implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary.... There must be transformation; a new and different article must emerge, "having a distinctive name, character or use." 9. The Court in this case held that by cutting the pineapple into slices and thereafter canning it, on adding sugar to preserve it, did not change the identity nor did it bring into existence different goods. 10. The appellant on the basis of aforementioned definition asserted that its activity does not amount to manufacture o....
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....arose for adjudication before the Court was whether 'gitti', stone chips and dust continued to be stone or on crushing stone boulders into gitti, stone chips and dust different commercial goods emerged so as to attract sales tax on their sale. The Court opined that the term "stone" is wide enough to include the various forms such as 'gitti', 'kankar' and stone ballast. A similar view was taken by this Court in State of Maharashtra v. Mahalaxmi Stores ^2(2003) 1 SCC 70. 16. Reliance has also been placed on M/s. Crane Betel Nut Powder Works v. Commissioner of Customs and Central Excise, Tirupathi and Anr., ^3(2007) 4 SCC 155. In this case, the Court held that the process of manufacture employed by the appellant did not change the nature of the end product because the end product remained the betel nut. The process involved in sweetening the betel nut does not result in manufacture of a new product. The end product continues to be of original character though in a modified form. 17. On the other hand, the learned counsel appearing for the respondents also placed reliance on a number of decisions to strengthen his arguments that mixing and grinding of different spices along with ....
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....er and chilly without any process whatsoever. Where coriander and chilly are powdered and mixed in certain proportion with or without other items, the mixture loses its original flavour and no longer retains the character as spices, even though the mixture may be one which is used in the preparation of food and for adding flavour. Thus, the Court approved the judgment of the Tribunal and held that the goods specified do not come under Item 27 and could be taxed only as general goods. 21. The respondents placed heavy reliance on a decision of this Court in Rajasthan Roller Flour Mills Association & Another v. State of Rajasthan & Others, (1994) Supp (1) SCC 413. In this case, there was difference of opinion amongst the High Courts in the country over the question whether wheat under Section 14(1) (iii) of The Central Sales Tax Act includes flour, Fine Wheat Flour ('maida') and Semolina ('suji'). The Karnataka and the Patna High Courts have held that it is not included, while the Andhra Pradesh, Rajasthan and the Madras High Courts have taken a contrary view. This Court examined the entire case in great detail. This Court's specific findings are reflected in paragraphs 15 and 40 o....
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....t by merely carrying out the process of dehusking at their mills. Consumption in the true economic sense does not mean only use of goods in the production of consumers' goods or final utilization of consumers' goods by consumers involving activities like eating of food, drinking or beverages, wearing of clothes or using of an automobile by its owner for domestic purposes. A manufacturer also consumes commodities which are ordinarily called raw materials when he produces semi-finished goods which have to undergo further processes of production before they can be transformed into consumers' goods. At every such intermediate stage of production, some utility or value is added to goods which are used as raw materials and at every such stage the raw materials are consumed. Take the case of bread. It passes through the first stage of production when wheat is grown by the farmer, the second stage of production when wheat is converted into flour by the miller and the third stage of production when flour is utilized by the baker to manufacture bread out of it. The miller and the baker have consumed wheat and flour respectively in the course of their business. We have to understand the word ....