COMMISSIONER OF TRADE TAX versus M/S. KUMAR PAINTS AND MILL STORES THROUGH ITS PROPRIETOR

Citation: [2023] 2 S.C.R. 938 · Decided: 02-03-2023 · Supreme Court of India · Bench: S. RAVINDRA BHAT · Disposal: Dismissed
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Judgment (excerpt)

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938
SUPREME COURT REPORTS
[2023] 2 S.C.R.
COMMISSIONER OF TRADE TAX
v.
M/S. KUMAR PAINTS AND MILL STORES
THROUGH ITS PROPRIETOR
(Civil Appeal No. 5937 of 2011)
MARCH 02, 2023
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
U.P. Trade Tax Act, 1948 – s. 2(e)(i) – Mixing of base paint
with different colours, result into a new product or not – High Court
held that mixture of the base paint with different colours- did not
result in a ‘new’ product and therefore did not result from the process
of ‘manufacture’ as defined under section 2(e)(i) of the 1948 Act –
Revenue contended that the sale of paints which had undergone
mixing amounted to ‘manufacture’, thereby resulting in a new
product, which was afresh incidence of taxation – Held: In the instant
case, the findings based on the expert’s evidence are that the base
paint was mixed with colouring as an additive – Both of these had
suffered tax - The resultant article i.e., the paint of a different shade,
did not result in a new commercial product – New product was
nothing else but ‘paint’, and not a different article – High Court
did not commit any error.
Dismissing the appeal, the Court
HELD: 1. In Mahalaxmi Stores, this court relied on previous
decisions such as Commissioner of Sales Tax Vs. Pio Food Packers
(1980) Suppl. SCC 174, and Chowgule and Company(P) Limited
Vs. Union of India to state that the manufacturing process can
vary, and that the process of producing every type of variation,
or finishing of goods, would not amount to ‘manufacture’ as
contained in the statute unless it resulted in the emergence of a
new commercial commodity. [Para 7]
2. In Sonhbadra, this court while deciding the facts of the
case before it cited a large number of decisions rendered in the
context of what was meant by ‘manufacture.’ This court specifically
noticed in Union of India V. Delhi Cloth and General Mills that
[2023] 2 S.C.R. 938
938
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‘manufacture’ meant bringing into existence a ‘new’ substance
and did not mean merely to bring about some change in the
substance. In Mahalaxmi Stores, it was held that processing or
variation/finishing of goods would not per se amount to
manufacture unless it resulted in the emergence of a new
commercial commodity. The decision in Aspinwall & Co. Ltd. V.
Commissioner of Income Tax, Ernakulam follows the same
principle. The court held that manufacture must be understood
in common parlance and means production of articles for use from
raw or prepared materials by giving them forms, qualities or
combination. Importantly however, it was held that if the change
made in the article resulted in a ‘new’ and ‘different’ article, it
would amount to ‘manufacturing’. The tipping point, or the
determinative test, therefore is that the result of the process
(amounting to ‘manufacture’) must be the emergence of a
commercially recognizable new commodity, and not mere variation
of an existing one. [Para 8][942-A-E]
State of Maharashtra v. Mahalaxmi Stores (2003) 1 SCC
70 : [2002] 4 Suppl. SCR 292; Sonebhadra Fuels v.
Commissioner Trade Tax, U.P., Lucknow (2006) 7 SCC
322 : [2006] 4 Suppl. SCR 213; Commissioner of Sales
Tax v. Pio Food Packers (1980) Suppl. SCC 174 : [1980]
SCR 1271; Chowgule and Company(P) Limited v. Union
of India (1981) 1 SCC 653 : [1981] 2 SCR 271; Union
of India v. Delhi Cloth and General Mills (1963) Suppl.
1 SCR 586; Aspinwall & Co. Ltd. v. Commissioner of
Income Tax, Ernakulam (2001) 7 SCC 525 : [2001] 2
Suppl. SCR 559 – referred to.
Case Law Reference
[2002] 4 Suppl. SCR 292
referred to
Para 4
[2006] 4 Suppl. SCR 213
referred to
Para 4
[1980] SCR 1271
referred to
Para 7
[1981] 2 SCR 271
referred to
Para 7
[1963] Suppl. 1 SCR 586
referred to
Para 8
[2001] 2 Suppl. SCR 559
referred to
Para 8
COMMISSIONER OF TRADE TAX v. M/S. KUMAR PAINTS AND MILL
STORES THROUGH ITS PROPRIETOR
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SUPREME COURT REPORTS
[2023] 2 S.C.R.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5937
of 2011.
From the Judgment and Order dated 18.05.2009 of the High Court
of Judicature at Allahabad in TTR No. 711 of 2002.
With
Civil Appeal Nos. 5938 and 5939 of 2011
R K Raizada, Sr. Adv., Bhakti Vardhan Singh, Adv. for the
Appellant.
Ms. Charanya Lakshmikumaran, Ms. Apeksha Mehta, Ms. Neha
Choudhary, Ms. Falguni Gupta, M. P. Devanath, Ashwani Kumar,
Ms. Iti Sharma, Puneet Sharma, Anshay Dhatwalia, Advs. for the
Respondent.
The Judgment of the Court was delivered by
S. RAVINDRA BHAT, J.
1. The question which is urged in all these
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