WA 176/2007 BEFORE HON’BLE THE CHIEF JUSTICE MR. R.S.GARG HON’BLE MR. JUSTICE RANJAN GOGOI Ranjan Gogoi, J Aggrieved by the rejection of his writ petition, the appellant w ho is the sole proprietor of M/s Tirupati Food Products, has instituted the pres ent proceedings. 2. The brief facts that will be required to be noticed for the purp oses of the present adjudication may be stated at the outset: The petitioner claims to be engaged in the business of manufactu re and sale of packaged pure mustard oil in a registered Small Scale Industrial unit located at Pancharatna Road, Goalpara in the State of Assam. The aforesaid unit of the petitioner which went into commercial production in the year 2003, i t is stated, was set up pursuant to the Assam Industries (Sales Tax Concession) Scheme, 1997 which was framed in exercise of powers under Section 9(4) of the As sam General Sales Tax Act, 1993 (hereinafter referred to as ’the Act’). It is th e pleaded case of the petitioner that in the Industrial Policy Resolution announ ced by the Government of Assam in the year 1997, amongst others, individual indu strial units established after 1.4.97 were promised sales tax exemption on the s ale of finished products as well as on the purchase of raw materials. Such exemp tion was to be granted for a period of seven years from the date of commencement of commercial production. 3. As exemption from sales tax is regulated by the provisions of Se ction 9(4) of the Act which contemplates the framing of appropriate schemes by t he State Government, the Assam Industries (Sales Tax Concession) Scheme, 1997 wa s accordingly framed. Section 9(4) of the Act and Clause (iii) of the Scheme, wh ich are in the following terms, will be required to be specifically noticed and, therefore, the said provisions are being reproduced hereinbelow: 9.(4) The State Government may, from time to time by notification in the Offici al Gazette frame one or more schemes for grant of relief to any class of indu stries within the State or within any specified part of the State on or after su ch date as may be specified in such scheme and producing such goods as may be sp ecified therein by way of full or partial exemption of any tax payable under thi s Act on the raw materials or other input purchased by them within the State or on the manufactured goods sold by them within the State or in the course of inte r-State trade or commerce for such period or periods as may be specified or by w ay of deferment of the tax payable by them under this Act for such period as ma y be specified and subject to such other restrictions and conditions as may be p rovided in such scheme or schemes Clause IIII The scheme shall apply to the industrial units situated in Assam, which are considered eligible for sales tax exemption on purchase of raw materials wit hin the State of Assam and also on the sales of the finished products, manufactu red in such eligible units in the State of Assam and in the course of inter Stat e trade and commerce, with reference to the 1997 Incentive Scheme formulated i n pursuant to the Industrial Police of Assam, 1997 . 4. According to the petitioner, being eligible, the Directorate of Industries, Govt. of Assam granted an eligibility certificate to the petitioner on 12.2.2004 certifying the petitioner’s unit to be eligible for sales tax exemp tion on the finished products manufactured in the said unit as well as on the ra w materials used. In the said eligibility certificate, which was valid from 18.5 .2003 to 17.5.2010, it was specifically mentioned that the raw materials on whic h the petitioner would be entitled to exemption are mustard seeds and raw mus tard oil and the finished product as mustard oil. However, the District Level C ommittee in a meeting held on 9.4.2004 took the decision that the process of fil tration of raw mustard oil and, thereafter, packing the filtered mustard oil in plastic pouches, which was being undertaken in the unit of the petitioner, does not amount to manufacture/processing as there is no physical change of the basic raw material. The Committee, therefore, resolved that the raw mustard oil and t he mustard oil packed in pouches in the petitioner’s unit as finished product fr om the said raw material i.e. raw mustard oil, will not be eligible for sales ta x exemption. In the said meeting the Committee also resolved that the exemption earlier granted on mustard seeds and mustard oil produced by the oil expeller in stalled in the petitioner’s unit from mustard seeds would continue to enjoy the exemption as before. 5. Pursuant to the said decision of the District Level Committee, t he eligibility certificate of the petitioner was amended and raw mustard oil whi ch was earlier declared to be eligible for exemption of tax as a raw material st ood deleted. It appears that, thereafter, the jurisdictional Superintendent of T axes by a notice dated 9.7.2004 took note of the aforesaid developments and info rmed the petitioner that in view of the change of its entitlement for exemption from payment of sales tax, the petitioner is required to submit return and, ther eafter, pay the requisite taxes. It also appears that an authorization certifica te contemplated by the provisions of the Sales Tax Concession Scheme was issued to the petitioner by the Superintendent of Taxes on 9.7.2004 wherein mustard see ds alone was mentioned as the raw material on which exemption from payment of sa les tax would be permissible. In the meantime, the assessing officer of the peti tioner proceeded to complete the assessment of the petitioner for the period 200 3-2004 under the provisions of Section 17(4) of the Act and a notice of demand w as issued for a sum of Rs. 5,79,285/- inclusive of interest. Aggrieved by the af oresaid actions, the writ petition out of which this appeal has arisen was insti tuted by the appellant/ writ petitioner contending that raw mustard oil and the mustard oil obtained therefrom were both entitled to exemption from payment of s ales tax. The assessment of the petitioner as well as the consequential notice o f demand was also assailed in the writ petition filed. 6. The learned Single Judge hearing the writ petition took note of the provisions contained in Section 9(4) of the Sales Tax Act which empowered th e State Government to grant exemption from payment of tax under the Act both in respect of raw materials or other inputs as well as on the finished products/man ufactured goods. On a consideration of the provisions of Section 9(4) of the Act , the learned Single Judge took the view that relief by way of exemption was con templated to industries producing such goods as may be specified in a notificat ion to be issued. As according to the learned Single Judge exemption was to be given to units engaged in production of the specified goods in order to be entit led for exemption on the raw materials used as well as the finished products, th e process undertaken must be one of production which implies a change of the bas ic raw material or inputs to such other form that the finished product may parta ke. On an appreciation of the manufacturing process deployed in the petitioner’s unit, as described in paragraph 14 of the writ petition, the learned Single Jud ge came to the conclusion that the process deployed was one of filtration and th ough there is some consequential improvement on the raw material i.e. raw mustar d oil, the end product i.e. mustard oil is not substantially different from the raw material/ input used. In view of the above conclusion, the learned Single Ju dge thought it proper to conclude that the petitioner’s unit does not satisfy th e requirements spelt out by Section 9(4) of the Act and, therefore, the exemptio n notification i.e. the Concession Scheme issued under the said provisions of th e Act can have no application to the petitioner so as to entitle the petitioner to the benefits therein. Aggrieved, this appeal has been filed. 7. We have heard Dr. AK Saraf, learned senior counsel for the appel lant and Mr KN Choudhury, learned Addl. Advocate General, Assam appearing for th e respondents. 8. Dr. Saraf, learned senior counsel for the appellant/ writ petiti oner has submitted that under Section 9(4) of the Act exemption is to be granted on purchase of raw materials and also on the sale of the manufactured/ finished goods by an eligible unit. Referring to the Sales Tax Concession Scheme, Dr. Sa raf has pointed out that the said Scheme contemplates grant of similar exemption to an eligible unit. Naturally, the Concession Scheme has to conform to the pro visions of Section 9(4) of the Act which basic requirement is adequately met in the present case. The exemption under the Act and the Scheme being on raw materi als and manufactured goods, Dr. Saraf has laid emphasis on the definition of ’ma nufacture’ contained in Section 2(22) of the Act which is in the following terms : 2.(22) manufacture with all its grammatical variations and cognate expressions , means producing, making, extracting, altering, ornamenting, blending, finishin g or otherwise processing, treating or adapting any goods; but does not include a works-contract or such manufacturers or manufacturing processes as maybe presc ribed 9. Dr. Saraf has submitted that the above definition is in the wide st possible terms and includes finished goods which may not strictly undergo a p rocess of manufacture if the dictionary meaning of the word is to be taken into account. On the said basis the learned counsel has submitted that the normal inc idence of a manufacturing process i.e. creation of a new product distinguishable from the input used is not a necessary precondition to attract the definition o f ’manufacture’ contained in Section 2(22) of the Act. An article may be underst ood to have been manufactured from a particular input even if there is a fair se mblance of similarity between the input and the end product. Dr. Saraf has relie d upon a decision of the Apex Court in Ashirwad Ispat Udyog & Ors. -vs- State Le vel Committee & Ors. , reported in (1998) 8 SCC 85 as well as another decision of the Apex Court in Sonebhadra Fuels -vs- Commissioner, Trade Tax, U.P., Luckn ow reported in (2006) 7 SCC 322 wherein a similar wide definition of the express ion ’manufacture’ had been considered by the Apex Court to mean that no new prod uct is required to come into existence so as to attract the wide definition of ’ manufacture’. In fact, it is pointed out by Dr. Saraf, that in Sonebhadra Fuels (supra) the Apex Court had taken such a view while considering the definition of ’manufacture’ contained in Section 2(e-1) of the U.P. Trade Tax Act, 1948 which is perimateria with the definition contained in Section 2(22) of the Act. Refer ring to the process deployed in the appellant’s unit, as stated in paragraph 13 of the writ petition, Dr. Saraf has submitted that the filtration process undert aken transforms raw mustard oil to pure mustard oil. In this regard, the learned counsel has submitted that the learned Single Judge has also recorded the findi ng that raw mustard oil undergoes a process of improvement on account of the fil tration. This, according to the learned counsel, would be sufficient to bring th e end product i.e. pure mustard oil within the four corners of the definition of ’manufacture’ in Section 2(22) of the Act so as to make the appellant entitled to the benefit of exemption under the Sales Tax Concession Scheme, 1997. 10. On the other hand, Mr KN Choudhury, learned Addl. Advocate Gene ral, Assam has contended that the judgments of the Apex Court relied upon on beh alf of the appellant/ writ petitioner have to be understood in the context of th e facts of those cases and not as laying down any law of general application. Mr . Choudhury has also submitted that a consideration of the process deployed in t he unit of the petitioner would go to show that raw mustard oil only undergoes a process of filtration before the filtered oil is packed in pouches for sale by the petitioner. The end product i.e. mustard oil, according to Mr. Choudhury, is no different from the input i.e. raw mustard oil. In such a situation, the end product, according to Mr. Choudhury, cannot be understood to have undergone a pr ocess of manufacture even in terms of the wide definition contained in Section 2 (22) of the Act. 11. To support the above stand taken, Mr. Choudhury has relied on a judgment of the Apex Court in State of Maharashtra -vs- M/s Shiv Datt & Sons & O rs., reported in (1993) Supp. 1 SCC 222 to contend that the Apex Court while int erpreting the word ’manufacture’ defined in Section 2(17) of the Bombay Sales Ta x Act, 1959 [which definition is in the same terms as appearing in Section 2(22) of the Assam Act] took the view that though the definition of ’manufacture’ in Section 2(17) of the Bombay Act is in wide terms, the same should not lead to a wide interpretation so as to render the provisions practically meaningless. In t his regard, Mr. Choudhury has relied on the following observation contained in t he judgment in M/s Shiv Datt & Sons (supra): 10. .......................It is true that under the section it is not necessar y that there should be ’manufacturer’ in the sense that a new commodity has been brought into existence as would have been required if that word is interpreted in its literal sense. But, at the same time, the section should be so interprete d to mean only such of the various processes referred to in the definition and a pplied to the goods as are of such a character as to have an impact on the natur e of the goods ........... 12. Mr. Choudhury has also relied on the decision of the Apex Court in B.P. Oil Mills Ltd. -vs- Sales Tax Triunal & Ors., reported in (1998) 6 SCC 5 77. In the said case the assesee who was engaged in ’processing’ various oils i n the crude form (linseed, castor, mustered) into refined oil disputed his liabi lity to pay tax on the ground that the process deployed does not amount to ’manu facture’ so as to make the end product i.e. refined oil exigible to tax under th e U.P. Trade Tax Act. The Apex Court in interpreting the definition of the word ’manufacture’ which is in the same terms as in the Assam Act, took the view that some change in the end product, as compared to the input, must occur in order t o make the definition of ’manufacture’ applicable to the end product. In the fac ts before it the Apex Court held that the process involved amounted to manufactu re as the crude oil had undergone some changes in the course of the processing t hereof that was undertaken. Another decision of the Apex Court in State of Maharashtra -vs- Mahalaxmi Stores , reported in (2003) 1 SCC 70 has also been brought to our notice by the learned Addl. Advocate General wherein the Apex Court while once again interpreting the word ’manufacture’ as contained in Section 2(17) of the Bombay Sales Tax Act, t ook the view that to attract the said definition a new commercial commodity must come into existence. The aforesaid view contained in para 5 of the judgment may be conveniently extracted below: 5. From a perusal of the definition, extracted above, it is clear that the proc esses of producing, making, extracting, altering, ornamenting, finishing or othe rwise processing, treating or adapting of any goods fall within the meaning of t he term manufacture . But it may be pointed out that every type of variation of the goods or finishing of goods would not amount to manufacture unless it resul ts in emergence of a new commercial commodity. In the instant case, the very nat ure of the activity does not result in manufacture because no new commercial com modity comes into existence. . 13. Mr. Choudhury has also tried to take assistance from another jud gment of the Apex Court in Punjab Aromatics -vs- State of Kerala, reported in ( 2008) 11 SCC 482 wherein the Apex Court took the view that if the final product can be restored to the stage of the original input by another separate process t he test of consumption/ use of the input in the manufacture of the final product will not be satisfied so as to attract Section 5-A of the Kerala General Sales Tax Act, 1963. Mr. Choudhury has tried to relate the aforesaid judgment to the facts of the present case by contending that if the impurities in the raw mustar d oil, which are filtered to produce mustard oil, are to be added to the mustard oil the product would once again assume the character of raw mustard oil. 14. We have carefully considered the facts of the case as revealed b y the materials on record and the submissions advanced by the learned counsels f or the parties. We have also read and considered the judgments of the Apex Court which have been cited before us by the learned counsels for both the parties. 15. There can be no manner of doubt that the word ’manufacture’ has been defined in Section 2(22) of the Act in very wide terms. The said definition read in juxtaposition with the dictionary meaning of the word would indicate th at what is beyond the normally understood meaning of ’manufacture’ has been incl uded in the definition contained in Section 2(22) of the Act. Ordinarily and acc ording to the dictionary meaning, a raw material or an input on which further hu man effort is expended will give rise to a process of manufacture if by that pro cess a distinct or different commodity comes into existence. However, it is alw ays open to the legislature to prefer to ignore the literal/dictionary meaning o f the word and introduce a deeming provision by which the word can have a wider meaning. The definition of ’manufacture’ in Section 2(22) of the Act comprehends within its sweep an article which could be the result of a production process o r the making, extracting, altering, ornamenting, blending, finishing, processing , treating or adapting of goods. The deployment of any of the means included in the definition may give rise to a new commodity distinguishable from the input u sed. It may also bring about another article which, though not an entirely diffe rent commodity, may have some new features but at the same time retaining some f eatures of the original input. The decision of the Apex Court relied upon by the learned counsels for the parties to which a detailed reference has been made ea rlier indicate that while interpreting the perimateria definition of the word ’m anufacture’ as contained in the Assam Act, the unanimity of the views seems to b e that though no new article need to come into existence to attract the wider de finition of ’manufacture’, some changes in the end product in comparison to the basic input must emerge. The extent of such change may vary from case to case. The decision of the Apex Court in Ashirward Ispat Udyog (supra) and Sonebhadra F uels (supra), in the ultimate analysis, does not lay down any proposition of law fundamentally different from what has been laid down in M/s Shiv Datt & Sons (s upra) and B.P. Oil Mills (supra), inasmuch as, the end product considered in Ahs irwad Ispat Udyog (supra) and Sonebhadra Fuels (supra) had undergone some change s compared to the basic material from which the end product had emerged. The dec ision in State of Maharashtra -vs- Mahalaxmi Stores (supra) which insists on eme rgence of a new commercial commodity so as to attract the same definition as con tained in the Assam Act, (the Apex Court was considering the definition of ’manu facture’ in the Bombay Sales Tax Act, 1959 which is same as in the Assam Act) th ough, can be understood as striking a somewhat discordant note, can be explained as a decision earlier in point of time to the one rendered in Sonebhadra Fuels (supra) and also of a Bench numerically smaller than the one which had rendered the decision in State of Maharashtra -vs- Shiv Datta & Sons (supra) and B.P. Oil Mills (supra). The decision of the Apex Court in Punjab Aromatics (supra) may n ot strictly apply to the present case as in the said case under Section 5-A of t he Kerala General Sales Tax Act, 1963 which was under consideration, the liabili ty to tax was contingent on consumption of the inputs in the manufacture of othe r goods for sale or otherwise. It is in the above context that the test of irre versibility of the end product was applied by the Apex Court. 16. From the above discussions it would be clear that the true purpo rt and meaning of the wide definition of ’manufacture’ as contained in the Assam Act is that the expression ’manufacture’ with all its connotations under the de finition would require the final product to be noticeably different from the ba sic input though both i.e. the input and the final product may have some similar features. Production of a new commodity or a distinctly different commodity ha ving a separate identity is the requirement of the dictionary meaning of the wor d ’manufacture’ which can have no application in the teeth of the exercise of l egislative exercise resulting in the enactment of Section 2(22) of the Act. The aforesaid ratio of the law, if applied to the facts of the present case, cannot bring the activity carried out in the petitioner’s unit within the meaning of th e definition of ’manufacture’ contained in Section 2(22) of the Act. The end pro duct - ’mustard oil’ is fundamentally the same as the raw material/ input used i .e. raw mustard oil, inasmuch as, it is only the impurities in the raw mustard o il which is removed by a process of filtration. 17. The above discussion will, however, not conclude the matter. Se ction 9(4) of the Assam Act contemplates grant of relief to any class of indust ries ..................... producing such goods as may be specified therein..... ............ by way of full or partial exemption of any tax ........... on the r aw materials or other inputs ..................... or on the manufactured goods sold ............. A careful scrutiny of the provisions of Section 9(4) of the Assam Act would indi cate that the said section is in two parts. By the first part the identity of t he industries entitled to grant of relief by way of exemption is contemplated an d the second part deals with the goods in respect of which the benefit of exempt ion will be applicable. The first part clearly identifies industries producing goods to be entitled to grant of relief under Section 9(4) of the Act whereas the second part states that exemption will be both on raw materials and manufact ured goods. The emphasis in Section 9(4), therefore, is on production of goods i n an industry. The above view also would be consistent with the purpose for whic h exemptions from payment of