Back
IN THE HIGH COURT OF BOMBAY
M.H. Kania, Sujata V. Manohar, JJ.
COMMISSIONER OF SALES TAX
Versus
NHAVA POULTRY FARM
Sales Tax Reference No. 22 of 1979 in Reference Application No. 69 of 1974
Decided On: Decided On : 22-11-1984
SALES TAX - Manufacture - Rearing of chicks into broilers and keeping of hens for eggs - Whether amounts to manufacture - Bombay Sales Tax Act, 1959 (Bom. LI of 1959), Sec. 2(17).
Fact of the Case:
The assessee, a poultry farm, purchased one-day-old chicks and reared them into broilers or layers. They also kept hens to obtain eggs. The Sales Tax Officer held that these activities amounted to 'manufacture' under section 2(17) of the Bombay Sales Tax Act, 1959. The assessee appealed to the Assistant Commissioner and then to the Sales Tax Tribunal, both of whom upheld the Sales Tax Officer's decision.
Finding of the Court:
The court held that the assessee's activities did not amount to 'manufacture' within the meaning of section 2(17) of the Bombay Sales Tax Act, 1959. The court found that the assessee had not done anything more than rear the chicks and hens in a proper manner, and that this did not amount to 'altering, treating or adapting' the chicks or hens within the meaning of section 2(17). The court also found that the eggs laid by the hens were not produced by the assessee, but were a natural product of the hens.
Issues: Whether the assessee's activities of rearing chicks into broilers and keeping hens for eggs amounted to 'manufacture' within the meaning of section 2(17) of the Bombay Sales Tax Act, 1959.
Ratio Decidendi: The court held that the assessee's activities did not amount to 'manufacture' within the meaning of section 2(17) of the Bombay Sales Tax Act, 1959. The court found that the assessee had not done anything more than rear the chicks and hens in a proper manner, and that this did not amount to 'altering, treating or adapting' the chicks or hens within the meaning of section 2(17). The court also found that the eggs laid by the hens were not produced by the assessee, but were a natural product of the hens.
Final Decision: The court answered both questions in the affirmative, holding that the assessee's activities did not amount to 'manufacture' within the meaning of section 2(17) of the Bombay Sales Tax Act, 1959.
The Judgment of the Court was delivered by
KANIA, J. - This is a reference of a case stated by the Sales Tax Tribunal under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the said Act"). The following questions have been referred to us for our determination in this reference :
"(a) Whether the Tribunal was correct in law in holding that the activity of the respondents in feeding the one day old chicks and rearing them to a desired maturity of consumable table birds under expert supervision in their poultry farm for realising better price, does not amount to 'manufacture' within the meaning of section 2(17) of the Bombay Sales Tax Act, 1959 ?
(b) Whether the Tribunal was correct in law in holding that the activity of the respondents in feeding the one day old chicks and rearing them with a view to obtain eggs, does not amount to 'manufacture' with the meaning of section 2(17) of the Bombay Sales Tax Act, 1959 ?"
2. The facts giving rise to the reference are as follows :
The respondents conduct a poultry farm. The activities of the respondents inter alia comprise buying one day old chicks and rearing them into broilers or layers and rearing hens with a view to obtain eggs and selling broilers or layers and eggs laid by the layers and collected from the hens. During the period from 1st April, 1971, to 31st December, 1971, the turnover of purchases of the respondents was Rs. 34,800 and the turnover of sales was Rs. 23,456.74. The Sales Tax Officer concerned held that the above activities of the respondents amounted to manufacture within the meaning of section 2(17) of the said Act. The Sales Tax Officer fixed the liability of the respondents on the footing that they were entitled to the lower exemption of limit of Rs. 10,000 as provided in sub-section (4) of section 3 of the said Act. The Sales Tax Officer assessed the total tax payable by the respondents at Rs. 631.26 and levied a penalty of Rs. 94.68. The appeal preferred by the respondents to the Assistant Commissioner of Sales Tax was dismissed on the ground that the activities of the respondents amounted to manufacture within the meaning of section 2(170 of the said Act. The respondents filed a second appeal before the Sales Tax Tribunal. The Tribunal following its earlier decision in the case of Messrs. Rocha Poultry Farm (Appeal No. 47 of 1971 decided on 18th April, 1973) held that the activity of the respondents of rearing one day old chicks into broilers or layers does not amount to manufacture within the meaning of section 2(17) of the said Act. The Tribunal also held that the activity of rearing hens with a view to obtain eggs from the hence and collection of these eggs laid by the hens also does not amount to manufacture within the meaning of section 2(17) of the said Act. It is the correctness of this decision which is sought to be tested before us by way of questions referred to hereinabove.
3. The term "manufacture" is defined in sub-section (17) of section 2 of the said Act. The said sub-section states :
"'manufacture', with all its grammatical variations and cognate expressions, 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."
We are not concerned with any manufacture or manufacturing process which has been specifically excluded, because there was no argument to the effect that the activities carried on by the respondents, as set out above, were excluded specifically from the scope of the definition contained in section 2(17). At the relevant time, section 3 of the said Act inter alia provided certain limits of turnover below which the dealer concerned was not liable to tax under the said Act. In respect of a manufacturer, this limit was fixed at Rs. 10,000 and in the case of a dealer who was not a manufacturer or importer, the limits was fixed at Rs. 30,000. T
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
