The processing of rough granite blocks into polished tiles constitutes a distinct commercial product, excluding them from tax exemptions under the Karnataka Sales Tax Act.

1. These appeals, by special leave, assail the common judgment and order passed by the High Court of Karnataka in STA No. 574-575/2011 and other connected matters preferred under S.24(1) of the Karnataka Sales Tax Act , 1957 (for brevity, "the Act"), on 4th December, 2012 whereby it has overturned the order dated 25.02.2011 passed by the Additional Commissioner of Commercial Taxes, Zone - I, Bangalore in a batch of suo motu revisions under S.12 - A(1) of the Act whereby the revisional authority has opined that there had been an erroneous order in the appeal causing loss to the State exchequer and accordingly issued notices to the concerned assesses requiring them to participate in the revision petitions and file written objections and put forth their stand availing the opportunity of being heard. As the factual score in all the cases has the colour of similitude barring the numerical figures and the arithmetical computations, we shall advert to the facts in the appeal where "Ayili Stone Industries" is the respondent - assessee.

2. The respondent - assessee is a dealer under the Act as well as the Central Sales Tax Act , 1956 (for short, 'CST Act') and is engaged in the business of manufacturing and trading in granite stone. The assessing authority finalised the assessment for certain assessment years allowing exemption on polished granite stone on the basis that polished granite stones were produced from out of the tax suffered from rough granite blocks. Thereafter, the assessing authority reopened the assessment. While passing the order of reassessment, the Assessing Officer opined certain amount had been allowed exemption as second sale mentioning in the order of assessment that the granite stones sold within the State were polished out of unpolished granite blocks locally purchased on demand of sales tax. The said authority referred to Entry No. 17(1) of Part S of second schedule appended to the Act which relates to granite stones, namely, (a) polished, (b) unpolished and (c) chips. The Assessing Authority observed that the polished and unpolished granite stones are under separate entries in the said schedule and such being the case, treating of sale of polished granite sold within the State which are obtained out of unpolished granite stones as sales inasmuch as they are suffered sales tax was not correct and, therefore, the exemption had been granted erroneously. Being aggrieved by the aforesaid order, the assessee preferred an appeal before the appellate authority. After referring to the decision in M/s. Vishwakarma Granites v. Commissioner of Commercial Taxes, W.P. No. 13803/05 decided on 21st June, 2006 by Karnataka H.C., it opined that the orders passed under S.12A of the Act deserves to be set aside and accordingly allowed the appeals.

3. The revisional authority referred to the decision in Vishwakarma Granites (supra) wherein the High Court had considered the judgments rendered in Poonam Stone Processing Industries v. Deputy Commissioner of Commercial Taxes , Gulbarga, STC Vol. 94 page 182, Foredge Granite Pvt. Ltd. v. State of Karnataka , STRP No. 58/1991 decided on 12.12.1994, State of Karnataka v. Goa Granites , 2006 (60) Kar.L.J. 110, Chowgale and Company Pvt. Ltd. v. Union of India , AIR 1981 SC 1014 and came to hold as follows:
"8. In view of the clear dictum laid down by the Division Bench of this Court in the case of Foredge Granite Pvt. Ltd., this Court deems fit to hold that the activity of cutting and polishing of rough granite block will not amount to manufacturing activity and that the polished granite stone