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The Additional Commissioner of Commercial Taxes, Bangalore v. Ayili Stone Industries Etc. Etc.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 1983-2039 of 2016)Decided 18 Oct 2016
Civil Appeal Nos. 1983-2039 of 2016
Justice Dipak Misra · Justice Shiva Kirti Singh

Background

This order sends the case back; it does not decide the dispute. A batch of 57 connected appeals from Karnataka raised the question whether granite stone cut and polished into tiles is a commercially distinct product from polished or unpolished granite stone, and so separately taxable under the Karnataka Sales Tax Act, 1957.

Decision Breakdown

This is not a final decision on the dispute. After reviewing conflicting precedent on when processing produces a new commodity, the Court held that the Assessing Officer's original order had not examined in enough detail whether the processing created a genuinely new commodity or merely a polished granite slab. It said a finding had to be reached after due enquiry and that without it a final conclusion could not be reached. It set aside all the orders below, including the High Court's, and sent the matter back to the Assessing Officer to decide the classification question again.

Lesson Learnt

There is no final ruling yet on whether these assessees owe additional sales tax on their granite products. Whether processing creates a new taxable commodity must rest on a proper factual enquiry into the processing involved.

Official source (sci.gov.in)View Judgment (PDF)

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