The main legal point established in the judgment is the interpretation and application of the term 'manufacture' under Section 2(e-1) of the U. P. Sales Tax Act to determine the tax liability on the process of tinting and mixing in the case of paint and varnishes.

( 1 ) THE present revision is directed against the order of Tribunal dated October 11, 2002 relating to assessment year 1999-2000.

( 2 ) THE present revision has been admitted to decide two questions of law referred as below :

"1. Whether the order of the Trade Tax Tribunal dated October 11, 2002 is vitiated in law on account of non-consideration of the written arguments and the decisions delivered by this honourable Court as also by the honourable Supreme Court ? 2. Whether under Notification No. 2375 dated November 23, 1998 paint and varnishes are taxable at single point, hence what was sold by the applicant was paint only on which the tax was already paid and therefore merely because some colour was added in the said paint it will not cease to be paint and cannot be subject to tax again in view of the aforesaid Notification No. 2375 dated November 23, 1998 ?"

( 3 ) THE case of the applicant is, that the applicant had established a computerised machine named as "colour world" manufactured by Asian Paints India Limited with a view to provide various shades of colour as per the choice of the customers. The applicant submitted, that it purchased white paint within the State of U. P. on payment of tax and on the desire of the customers mixed stainers purchased within the State of U. P. According to the applicant, by the process of staining, colour was given to the white paint and therefore, thematerial which was purchased within the state of U. P. was white paint and after staining or tinting by stainers it remained paint and no independent distinct commercial commodity came into existence. He submitted that the process of tinting/staining is not the manufacturing process as defined under Section 2 (e-1) of the U. P. Sales Tax Act and since the white paint was U. P. purchased (tax paid), hence, coloured paint is not liable to tax. The applicant claimed exemption on the turnover of coloured paint before the assessing authority.

( 4 ) THE assessing authority rejected the claim of the applicant on the ground that the material used was not the white paint but was the base material for paint out of which, the paint was made by mixing the colour and by undergoing the process in an automatic machine. According to the assessing authority after the process of mixing of colour a coloured paint was manufactured which was different commercial commodity and hence the process of mixing/tinting/staining amounts to manufacture as defined under Section 2 (e-1) of the Act. For coming to the aforesaid conclusion, the assessing authority referred the following facts :

(i) On July 27, 2001 dealer in its statement stated that there are only eight kind of base from which in machine by tinting and mixing 1200 colours paints are prepared. (ii) At the time of survey dated August 14, 2001 the proprietor of the firm was present and it was found that in the box of base material there is mention of "not to be sold without tinting and further base material for paints, final product after addition of colourant". (iii) Pigment is one of the important components of paint and due to the pigment, paint gets two important characteristics (a) protective, (b) decorative. Pigment provides a specific decorative colour to the paint and also protect from ultra violet rays. (iv) The process brings various changes on the base material, namely, (a) in the colour of base material, (b) density, (c) appearance for commercial use.

( 5 ) ON the consideration of the aforesaid factors, the assessing authority held :

(a) That the base material used was a semi-manufactured goods and was not a white paint. It could not be used as a paint. It held that white paint and base material are two different commodities. (b) With mixing the colourant in a base material, it acquires the characteristic of the paint. The materials which are being used are in the form of pigment and without mixing the pigment, it cannot be used as a paint. (c) The process of mixing/tinting in an automa