The Madras High Court ruled that the sprinkling of jaggery water on raw tobacco does not constitute manufacturing, thus setting aside the demand for higher compensation cess.
Madras High Court on Raw Tobacco Processing
The Madras High Court has ruled that the act of sprinkling jaggery water on raw tobacco does not amount to manufacturing under GST laws. This decision rejects the demand for a higher compensation cess previously imposed on the processing of tobacco products.
The court found that this action does not transform the raw tobacco into a new or different product, which is a requisite element for establishing manufacturing activities under GST. This ruling clarifies the boundaries of what constitutes 'manufacture' in related products, providing significantly useful precedent for similar cases.
For professionals advising clients in the tobacco industry, this decision is a crucial point of reference, providing a clear delineation between processing and manufacturing activities under GST definitions. Practitioners should incorporate this analysis into their advisory practices to ensure compliance and mitigate risks associated with tax disputes.
