The process of refining oil is deemed to be manufacture as per the definition under the Act, and the retrospective definition of 'manufacture' was not within the scope of the reference.

The judgment of the Court was delivered by

V. A. MOHTA, J. - The following question is referred for determination at the instance of the assessee under section 61 of the Bombay Sales Tax Act, 1959 ("the Act") :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that conversion of crude cotton seed oil into refined oil amounts to manufacture within the meaning of section 2(17) of the Bombay Sales Tax Act, 1959 ?"

2. The basic factual background is as under :

The assessee is an oil mill owner. He is a registered dealer. During the period 31st October, 1970 to 19th October, 1971, he purchased crude cotton seed oil for resale from registered dealers on form 16 of rule 21 framed under section 12-C of the Act. The crude oil was refined in his oil mill by a technical process which calls for mixing of caustic soda. According to the Sales Tax Officer, the process amounted to "manufacture" and hence, those purchases were subjected to purchase tax under section 14 of the Act. The assessee had contended that there was no manufacturing process involved. This submission was rejected by the Sales Tax Officer as well as by the first and second appellate authorities.

3. The word "resale" is defined under sub-section (26) of section 2 of the Act as under :

"'resale' for the purposes of sections 7, 8, 8A, 9, 12, 13 and 13B means a sale of purchased goods -

(i) in the same form in which they were purchased, or

(ii) without doing anything to them which amounts to, or results, in a manufacture, and the word 'resale' be construed accordingly :

Explanation. - For the purposes of clauses (i), (ii) and (iii) of section 8, a sale of purchased goods other than declared goods, shall not be deemed to be a resale, -

(i) if the seller holds a trade mark or a patent in respect of the goods sold, or if the seller holds a patent in respect of the method or process of manufacturing the goods sold; or

(ii) if the seller is entitled to use a trade mark or a patent in respect of the goods sold, or if the seller is entitled to use a patent in respect of the method or process of manufacturing the goods sold;".

The word "manufacture" is defined under sub-section (17) of section 2 of the Act as under :

"'manufacture' with all its grammatical variations and cognate ex-pressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise processing treating or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed;

Explanation I. - For the purposes of this clause, the cutting sawing, shaping, sizing or hewing of timber, shall be deemed to be manufacture.

Explanation II. - For the purpose of this clause, refining of oil shall be deemed to be manufacture;".

The definition of the term "manufacture" was amended by Act No. 9 of 1989 with retrospective effect from the date of bringing into force the Act, i.e., 1st January, 1960. The process of refining oil is thus included in the definition of manufacture even for the relevant period by a deeming fiction. Under the circumstances, there is no scope for debate on the question that conversion of crude oil into refined oil involved manufacturing process. It is contended by Shri V. C. Daga, the learned counsel for the assessee, that retrospective definition is bound to cause prejudice to the assessee and under the circumstances, he is entitled to exemption on the basis of trade circular issued by the Commissioner. We are not in this reference concerned with that aspect of the matter. The assessee is free to move the appropriate authority for that relief, if available.

4. To conclude, the question is answered in the affirmative. No order as to costs.

Reference answered in the affirmative.