State Taxation Tribunal - West Bengal
Abdos Oil Pvt. Ltd. And Anr. vs Assistant Commissioner Of Commercial ... on 29 January, 1999
Equivalent citations: [2001]121STC166(TRIBUNAL)
JUDGMENT
1. Arguments on both sides are heard in full.
2. This is an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 arising out of order dated December 2, 1998 passed by the Deputy Commissioner of Commercial Taxes, Special Cell (respondent No. 3). The facts leading to the present application are that the applicant No. 1 company, a company incorporated under the Companies Act, 1956 is engaged in manufacturing perfumed coconut hair oil in packed containers under the brand name "Nihar". The brand name belongs to Hindusthan Lever Ltd. On August 28, 1997 the company applied for a provisional certificate under Rule 26 of the West Bengal Sales Tax Rules, 1995 for availing of the benefit of exemption from tax on sales of goods made to the applying dealer and for other purposes as stated in Sub-rule (1) of Rule 26. That application was rejected by respondent No. 1 by order dated December 2, 1997 on the ground that the activity undertaken by applicant No. 1 did not amount to "manufacture" within the meaning of the West Bengal Sales Tax Act, 1994. An appeal preferred by the dealer before respondent No. 2, Deputy Commissioner of Commercial Taxes, Special Cell, was without any result because by order dated June 30, 1998 respondent No. 2 confirmed the order of the Assistant Commissioner. Thereafter applicant No. 1 moved an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 before this Tribunal which was registered as RN-267/98. On October 30, 1998 that application was not entertained on the ground that a second revision under the statute, which was an alternative remedy, had not been availed of. With certain directions regarding disposal of the second revision application, if filed by the applicant No. 1, the earlier application under Section 8 of the Act of 1987, RN-267/98, was disposed of. Thereafter applicants preferred the second revision before respondent No. 3, Additional Commissioner of Commercial Taxes, Special Cell, who was of the same opinion as the earlier authorities and whose order dated December 2, 1998 is under challenge before us.
3. Sub-rule (4) of Rule 26 of the West Bengal Sales Tax Rules of 1995 lays down that in the application for provisional certificate one is required to declare that a business for the manufacture of goods in his manufacturing unit in West Bengal for sale in West Bengal is going to be established and that the annual turnover of sales shall not be less than fifty thousand rupees. Sub-rule (5) of Rule 26 lays down "what other particulars are to be mentioned in the application. According to Rule 27 of the said Rules of 1995, provisional certificate may be granted if the applicant proves to the satisfaction of the issuing authority that he has a bona fide intention to establish a business for the manufacture of goods in West Bengal for sale of such goods.
4. In this context Mr. M.L. Bhattacharya, learned counsel for the applicants, has argued that the activity undertaken by the applicant amounts to "manufacture" in terms of the definition in Section 2(17) of the Act of 1994. He refers to the impugned order dated December 2, 1998 of respondent No. 3 wherein the process of manufacture has been recorded after an inspection of the manufacturing unit by respondent No. 3. It may be stated at this stage that there is no dispute regarding the process or processes of manufacture as claimed by the applicants. The processes are that the applicant-company purchases refined, bleached and deodorized (RED) coconut oil as raw material and blends two varieties of perfume with it and the mixture is further refined through filtration. Ultimately the product is packed in small containers for sale under the brand name "Nihar". The authorities below did not consider such activities as manufacture, because they thought that the final product did not amount to a new commercial product.
5. Mr. Bhattacharya appearing for the applicants has submitted that in terms of the definition in Section 2(17) the activities should be treated as "manufacture", because "blending" is an activity which is specifically mentioned in Section 2(17). Moreover, he refers to filtration as a process of manufacture by which certain unwanted elements are removed from the raw materials used. He also argues that the activities amount to producing and making which are expressions used in Section 2(17). Moreover, he submits that the product as sold in containers is a new commercial commodity by all means. According to him, the question whether the commodity is a new commercial commodity, is to be decided on how it is treated in trade parlance. He argues that in trade parlance perfumed coconut oil packed in containers under brand name "Nihar" is certainly different from the raw materials, namely, RED coconut oil used for the purpose of alleged manufacture. He relies on the decisions of this Tribunal in the cases of Edible Products (India) Private Limited v. Commercial Tax Officer [1991] 83 STC 317 and Jindal (India) Limited v. Deputy Commissioner, Commercial Taxes, Special Cell [2000] 117 STC 426 ; (1997) 30 STA 37. In the first case it was held that refinement of raw oil amounts to manufacture. In the second case it was held that the registration certificate affords an evidence regarding the nature of activity of the dealer. If in the registration certificate it is stated that the dealer is a manufacturer, it is a piece of evidence in support of the contention for the purpose of issuing provisional certificate that the dealer is a manufacturer. By referring to the decision in Ashirwad Ispat Udyog v. State Level Committee [1999] 112 STC 207 (SC) ; (1998) 8 SCC 85 at page 88 (page 210 of STC), Mr. Bhattacharya appearing for the applicants argues that no matter what might have been held in decisions relating to provisions of other enactments, if an activity amounts to "manufacture" under the definition of a particular enactment it should be treated as such under that Act.
6. Mr. J.K. Goswami, learned State Representative appearing for respondents, has opposed the contentions of Mr. Bhattacharya. According to him, the product cannot be said to be a new commercial commodity, even by trade parlance. He refers to the case of State of Gujarat v. Sukhram Jagannath [1982] 50 STC 76 (Guj) at pages 80 and 81 and argues that the identity of the raw material in the case before us has undergone no significant change and hence it is identical with the finished product. Mr. Goswami argues that the raw material is substantially retained in the finished product and hence it cannot be treated as an activity of manufacture, since there is no new commercial commodity. Mr. Bhattacharya in his reply also relies on this decision in State of Gujarat v. Sukhram Jagannath [1982] 50 STC 76 at pages 80 and 81 and submits that the finished product in this particular case has certainly changed its character and name and hence even according to the said decision, the activities of the present applicant No. 1 should be treated as "manufacture" within the meaning of Section 2(17) of the Act of 1994.
7. The definition of "manufacture" is given in Section 2(17) as under :
"'Manufacture' with all its grammatical variations and cognate expressions, means producing, making, extracting or blending any goods or such processing of any goods as may be prescribed, but does not include a works contract or such manufactures or manufacturing processes as may be prescribed ;".
8. The expression, "blending" has been used in the above definition. Respondent No. 3 has clearly mentioned in his order that the activities include blending of perfumes with RBD coconut oil. It is common ground that no rules have been made and no prescriptions have been done with regard to the particular types of processing or manufacturing processes which are to be excluded from the definition of "manufacture" under Section 2(17). That being the position, blending of RBD coconut oil with perfumes clearly comes within the definition. Therefore, we have to agree with Mr. Bhattacharya appearing for the applicants that blending of RBD coconut oil and perfumes itself makes the activity a manufacturing activity. Although neither party has adduced any evidence on the fact whether "Nihar" brand coconut oil as sold by applicant No. 1 and RBD coconut oil as purchased by it as raw material are known in trade parlance as different commercial commodities, we may take a judicial notice of the fact of what generally happens in trade circle. RBD coconut oil by its own nature cannot be treated in trade parlance as "Nihar" brand perfumed coconut oil and hence in trade parlance also the finished product of applicant No. 1 is a manufactured product.
9. We are unable to uphold the contentions of the respondents that the activities undertaken by applicant No. 1 company do not amount to manufacture or that the finished product is not a new commercial commodity. Therefore, the impugned orders of respondents Nos. 1, 2 and 3 cannot be sustained.
10. As already stated, the application for provisional certificate was made on August 28, 1997. We are told that the first date of manufacture was sometime in January, 1998. There was an application for registration as a dealer under the Act of 1994. The appropriate authority granted the registration certificate on March 27, 1998 with effect from January 17, 1998. In terms of the provisions of Rule 26 of the Rules of 1995 the applicant, who set up the manufacturing unit after making the application for provisional certificate, is entitled to a provisional certificate for the period up to only January 16, 1998.
11. Accordingly, we direct respondent No. 1 to issue to applicant No. 1 company a provisional certificate under Rule 26 effective up to January 16, 1998. The impugned orders of the authorities below, namely, respondents Nos. 1, 2 and 3 dated December 2, 1997, June 30, 1998 and December 2, 1998 respectively are all set aside.
12. Thus the main application is allowed and finally disposed of without any order for costs.