JUDGMENT
Rajes Kumar, J.
1. The present revision under Section 11 of the U.P. Trade Tax Act (hereinafter referred to as the Act) is directed against the order of the Trade Tax Tribunal dated 29th May. 1998.
2. Brief facts giving rise to the present revision are that the dealer – Opposite Party (hereinafter referred to as the dealer) was having a factory at Tonsa in the State of Punjab for the manufacturing of pesticides and chemicals etc. In the State of Uttar Pradesh at Rampur they had a sale depot which was registered under the U.P. Trade Tax Act and under the Central Sales Tax Act. The registration under the Central Sales Tax Act was issued in Form B on 02.04.1987 for resale of the pesticides and chemicals. On 10.02.1992, peppermint oil, mentha oil, fluxfold, mentha granules etc. have been added. On 20.07.1991 the dealer moved an application for addition of machinery, equipments, air conditioner,
fridge, furniture and organic chemicals. It was stated that the aforesaid items were required for the use in the research work. The assessing authority required the dealer to show cause why the application be not be rejected inasmuch as the dealer was carrying on the trading business of pesticides and chemicals. The dealer explained that as per the direction of the Agriculture Ministry a research centre was established at Noida and before the sale of pesticides etc. testing and research centre was required. Thus treating the testing as a part of the manufacturing process the aforesaid items were required to be added with registration certificate. The assessing authority rejected the application vide order dated 26.03.1995 on the ground that testing in the research centre was not the part of the manufacturing process as no manufacturing activity was being carried on in the State of
Uttar Pradesh. The assessing authority held that the dealer imported the goods from Punjab Factoiy by way of stock transfer and was selling such goods in the State of Uttar Pradesh and was not involved in any activity of manufacturing in the State of Uttar Pradesh.
3 The first appeal filed by the dealer was rejected. The dealer filed second appeal before the Tribunal which has been allowed by the impugned order. The tribunal held that testing of pesticides etc. at Noida research centre was a part of the manufacturing process, relying upon the decision of the apex Court in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v.
S.T.O. 65.16 STC 259 and Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes 65.16 STC page 259.
4. Heard learned Counsel for the parties. Learned Standing Counsel submitted that the dealer had a manufacturing unit in the State of Punjab where the pesticides etc. had been manufactured and the said goods had been imported inside the State of Uttar Pradesh by way of stock transfer. In the State of Uttar Pradesh the dealer was engaged in the trading business of pesticides etc. He submitted that testing of pesticides etc. at the research centre Noida was post manufacturing activity. He further submitted that at the time of clearance of the goods from the Punjab Factory the manufacturing process was over and no further process or any kind of activity was required. He further submitted that the decisions of the apex Court in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. S.T.O. (supra) and Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes (supra) are not applicable in the present case.
5. Learned Counsel for the dealer submitted that testing is a part of the manufacturing activity and therefore items required for the use in the Noida Research Centre were for the purpose of manufacturing, thus the dealer was entitled to the benefit of concessional rate of tax under Section 8(3)(b) of the Central Sales Tax Act.
6. Having heard learned Counsel for the parties and perused the orders of the authorities below. I find substance in the argument of the learned Standing Counsel and in my view the order of the Tribunal is not sustainable. Section 8(3)(b) of the Central Sales Tax Act reads as follows
8. Rates of the tax on sales in the course of interstate trade or commerce -(3) The goods referred to in Clause (b) of sub-section(1)
(a)… omitted.
(b) are goods of the class of classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.
7. Under Section 8(3)(b) of the Central Sales Tax Act the goods required for use in the process of manufacturing of product were eligible for the benefit of concessional rate of Central Sales Tax. The question involved for consideration is whether the process of testing at Noida is the part of manufacturing process. Admittedly the dealer had their manufacturing unit at Punjab for manufacturing of pesticides etc. Pesticides etc. had been cleared from the factory at Punjab as the final product which arrived in the State of Uttar Pradesh at the dealer’s depot by way of stock transfer. The testing of pesticides etc. at Noida Research Centre was only post manufacturing activity. Thus it cannot be said to be the part of manufacturing activity. The Tribunal has erred in taking the testing at Noida Research Centre as the part of the manufacturing activity. The decisions of the apex Court in the cases of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. S.T.O. (supra) and Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes (supra) are distinguishable on the facts and are not applicable in the present case. In the aforesaid cases it has been held that the entire process carried on by a dealer in converting raw material into finished goods amounts to the process of production. The process of designing has been held as the part of the manufacturing process. In the aforesaid cases all the activities including designing etc. was being carried on in the manufacturing unit while in the present case no manufacturing activity had been carried on in the State of Uttar Pradesh. The pesticides etc. had been cleared from the factory at Punjab as a final product and no further activity was required. Testing at the Noida Research Centre was only the post manufacturing activity and thus the goods required for the Noida Research Centre did not fall within the ambit of Section 8(3)(b) of the Central Sales Tax Act.
8. For the reasons stated above the order of the Tribunal is liable to be set aside.
9. In the result the revision is allowed. The order of the Trade Tax Tribunal dated 29th May, 1998 is set aside.
