IN HIGH COURT OF JUDICATURE AT BOMBAY, NAGPUR BENCH, NAGPUR WRIT PETITION NO.956 OF 2019 Gondia Beedi Leaves Contractors Association, Gondia, Office at Shri Raghukul, Deshbandhu Ward, Gondia 441601, through its Secretary Shri Pramodkumar s/o Harilal Shah, Aged about 65 years, R/o House No.136, Near Dr. Dharaskar Nursing Home, Lohia Ward, Railtoli, Gondia-441 614. Petitioner Versus 1. Union of India, Ministry of Finance, Department of Revenue, through its Joint Secretary, Office at Room No.46, North Block, New Delhi-110 001. 2. Principal Chief Commissioner of Income Tax, Nagpur Region Office at Ayakar Bhavan, Civil Lines, Nagpur 440 001. 3. Joint Commissioner of Income Tax (TDS), Range-2, Office at Ground Floor, TDS Wing, Aayakar Bhavan, Telankhedi Road, Civil Lines, Nagpur 440 001. 4. State of Maharashtra, through its Secretary, Department of Revenue and Forests, Mantralaya, Mumbai-440032. 5. Principal Chief Conservator of Forests (Head of Forest Force), VanBhavan, Ramgiri Road, Civil Lines, Nagpur-440 001. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 2 wp956.19.odt 6. Additional Principal Chief Conservator of Forests (Non Timber Forest Produce), Van Bhavan, Ramgiri Road, Civil Lines, Nagpur-440 001. 7. Deputy Conservator of Forests, Gadchiroli Division, Gadchiroli, Potegaon Road, Tahsil and District Gadchiroli-442 605. 8. Deputy Conservator of Forests, Brahmapuri Division, Brahmapuri, Kahali Road, Brahmapuri-441 206. 9. Commissioner of Income Tax (TDS), Nagpur, Office at : 101, Ground Floor, Aayakar Bhavan, Telankhedi Road, Civil Lines, Nagpur-440 001. Respondents Shri C.S. Kaptan, Senior Advocate, assisted by Shri R.S. Kalangiwale, Advocate, for Petitioner. Shri Anand Parchure, Advocate for Respondent Nos.1 to 3 and 9. Shri A.M. Deshpande, Additional Government Pleader for Respondent Nos.4 to 8. Coram : R.K. Deshpande & Vinay Joshi, JJ. Date of Reserving Judgment : 4 th September, 2019 Date of Pronouncing Judgment : 19 th September, 2019 Judgment (Per R.K. Deshpande, J.) : 1. question involved in this petition is whether members of petitioner-association, who are contractors of Tendu leaves (a forest produce), are entitled to claim ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 3 wp956.19.odt exemption under sub-section (1A) of Section 206C of Income Tax Act, 1961 from collection of tax at source from them by seller, namely, Forest Department of State of Maharashtra? 2. Notice for final disposal of matter was issued by this Court on 6-2-2019 and parties were heard finally by consent. Rule. petition is being disposed of finally. 3. petitioner-association is registered under Societies Registration Act, 1860. members of petitioner-association are registered Tendu contractors having separate registrations under Maharashtra Forest Produce (Regulation of Trade) Act, 1969 (for short, Regulation of Trade Act ) and Maharashtra Forest Produce (Regulation of Trade in Tendu Leaves) Rules, 1969. Tendu leaf is forest produce within meaning of Indian Forest Act, 1927 and it is grown naturally in forest areas. Tendu leaves are used for manufacture of bidi. 4. Section 3 of Regulation of Trade Act empowers State Government to divide every area into such number of units as it may deem fit in respect of each forest produce. Section 4 ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 4 wp956.19.odt thereof empowers State Government to appoint agents in different units for purpose of purchase and trade in forest produce on its behalf. It also empowers State Government to prescribe procedure for appointment of agents and terms and conditions for such appointment. State Government adopts procedure for public auction to sell or appoint agents for collection of Tendu leaves. agent or purchaser has to pay amount offered by him in auction as per terms and conditions contained in agreement of licence executed, which include taxes as are leviable from time to time. 5. contractor appointed as agent or licensee pursuant to auction conducted is required to process Tendu leaves. Several steps in process are stated as under : (a) first step is of pruning, which is process of cutting of small Tendu bushes of medium girth from ground level to have healthy Tendu plant, which would provide good quality leaves. (b) After 50 to 60 days of pruning, process of plucking of leaves starts and plucked leaves are bundled into 70 leaves each and are tied with strings ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 5 wp956.19.odt in roots of Palash Tree (Butea Monosperma). (c) next step is of drying of leaves and then sprinkling of water on bundles. (d) Then bundles of Tendu leaves are carried to collection centre where process of drying and weathering of Tendu leaves takes place in particular manner. (e) bundles are then kept at distance of 1 2 inches for drying and insecticides are sprinkled on bundles to save them from insects or termites. (f) Then bundles are exposed to sun and kept there as it is for 4 to 5 days in upside down position for drying and weathering from both sides and this process requires regular supervision. (g) Thereafter every Tendu bundle is to be rinsed properly and entire stock is shifted to another dry place where bundles are arranged vertically so that water is not retained in bundles. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 6 wp956.19.odt (h) Then bundles are covered by tarpaulin for 4 to 5 days and after opening of tarpaulin, bundles are put in jute bag containing 500 to 1000 bundles, depending upon size of leaves. (i) Thereafter bundles are stacked tightly in jute bag and it is packed. packed bag is exposed to sun from both sides for three days. (j) Tendu leaves then become ready for transportation to main godown approved by Forest Department. (k) It is only after completion of this entire process in prescribed manner leaves are ready for sale to manufacturer of bidi. activities involved are of drying, sprinkling of water for maintaining requisite moisture, sorting out and screening of leaves, bundling it, keeping in godown, preserving quality and colour of leaves, avoiding breaking and brittleness to maintain softness. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 7 wp956.19.odt 6. After introduction of provision of Section 206C under Income Tax Act, Department of Revenue, Central Board of Director Taxes, communicated its decision in writing on 23-1-1989 to Maharashtra Tendu Leaves Merchants Association that question of collection of tax at source at time of sale of Tendu leaves was examined and operation of drying and sprinkling of water, etc., on Tendu leaves purchased by traders is held to constitute processing . It was decision that traders of Tendu leaves conducting process would not fall within ambit of Section 206 of said Act and, therefore, no tax could be collected at source from purchases made by traders. 7. aforesaid decision was changed by Government of India, Ministry of Finance, Department of Revenue, on 10-1-1996, communicating that operations carried out by Tendu leaves traders do not change nature and character of leaves and those are performed only to maintain leaves in saleable and marketable condition. Further such operations do not result in any change in product and, therefore, merely drying, sprinkling of water, bundling of Tendu leaves, etc., cannot be equated with processing. As result, it is clarified ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 8 wp956.19.odt that provisions of Section 206C of Income Tax Act shall be applicable to case of Tendu leaves traders, as exception carved out in proviso to sub-section (1) of Section 206C is not applicable. earlier letter dated 23-1-1989 was withdrawn. 8. petition, therefore, challenges circular dated 10-1-1996 and further communications dated 29-11-2018 and 27-12-2018 issued by Joint Commissioner of Income Tax and Deputy Conservators of Forests, Bramhapuri and Gadchiroli Divisions, reiterating same position. petitioner claims that contractors of Tendu leaves, who are members of petitioner-association, are entitled to exemption under sub-section (1A) of Section 206C of said Act while purchasing Tendu leaves from Forest Department of State of Maharashtra. 9. Section 206C of Income-Tax Act, 1961 is under Part BB of Collection at source under Chapter XVII of said Act regarding collection and recovery of tax. provisions of sub-section (1) and (1A) therein being relevant, are reproduced below : ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 9 wp956.19.odt Profits and gains from business of trading in alcoholic liquor, forest produce, scrap, etc. 206C. (1) Every person, being seller shall, at time of debiting of amount payable by buyer to account of buyer or at time of receipt of such amount from said buyer in cash or by issue of cheque or draft or by any other mode, whichever is earlier, collect from buyer of any goods of nature specified in column (2) of Table below, sum equal to percentage, specified in corresponding entry in column (3) of said Table, of such amount as income-tax: TABLE Sl.N Nature of goods Percentage o. (1) (2) (3) (i) Alcoholic Liquor for human One percent consumption (ii) Tendu leaves Five per cent (iii) Timber obtained under forest Two and one-half per lease cent (iv) Timber obtained by any mode other Two and one-half per than under forest lease cent (v) Any other forest produce not being Two and one-half per timber or tendu leaves cent (vi) Scrap One per cent (vii) Minerals, being coal or lignite or iron One per cent ore Provided that every person, being seller shall at time, during period beginning on 1 st day of June, 2003 and ending on day immediately preceding ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 10 wp956.19.odt date on which Taxation Laws (Amendment) Act, 2003 comes into force, of debiting of amount payable by buyer to account of buyer or of receipt of such amount from said buyer in cash or by issue of cheque or draft or by any other mode, whichever is earlier, collector from buyer of any goods of nature specified in column (2) of Table as it stood immediately before 1st day of June, 2003, sum equal to percentage, specified in corresponding entry in column (3) of said Table, of such amount as income-tax in accordance with provisions of this section as they stood immediately before 1st day of June, 2003. (1A) Notwithstanding anything contained in sub-section (1), no collection of tax shall be made in case of buyer, who is resident in India, if such buyer furnishes to person responsible for collecting tax, declaration in writing in duplicate in prescribed form and verified in prescribed manner to effect that goods referred to in column (2) of aforesaid Table are to be utilised for purposes of manufacturing, processing or producing articles or things or for purposes of generation of power and not for trading purposes. 9.1 Sub-section (1) of Section 206C of Income Tax Act creates statutory liability upon every person, being seller, to collect from buyer of any goods of nature specified in ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 11 wp956.19.odt column (2) of Table below it, sum equal to percentage, specified in corresponding entry in column (3) of said Table, of such amount as income-tax, at time of receipt of such amount from buyer in cash or by issue of cheque or draft or by any other mode, whichever is earlier. Item (ii) in Table deals with Tendu leaves and percentage prescribed of income-tax is 5%. 9.2 Section 271CA of said Act deals with penalty for failure to collect tax at source. Sub-section (1) therein states that if any person fails to collect whole or any part of tax, as required by or under provisions of Chapter XVII-BB, then such person shall be liable to pay, by way of penalty, sum equal to amount of tax, which such person failed to collect. 9.3 Sub-section (1A) of Section 206C of said Act starts with non obstante clause of Notwithstanding anything contained in sub-section (1) ... and prohibits collection of tax in case of buyer, who furnishes to person responsible for collecting tax, declaration in writing in duplicate in prescribed form and verified in prescribed manner to effect that goods referred to in column (2) of Table are to be utilized for purposes of manufacturing or processing or ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 12 wp956.19.odt producing articles or things and not for trading purposes. 10. It is transaction of sale of Tendu leaves, which is covered by provision of sub-section (1) of Section 206C of Income-Tax Act, creating liability upon seller of it, to collect tax at source at rate of 5% of value of transaction. This provision takes in its sweep all kinds of transactions of sale of Tendu leaves; it be for purposes or utilization for processing or manufacture or production of different articles or things, such transaction would also attract statutory liability. Undisputedly, members of petitioner-association collect tax at source from manufacturers of bidi, at time of sale of processed Tendu leaves, as per sub-section (1) of Section 206C of said Act. 11. Though provision of sub-section (1A) of Section 206C of Income Tax Act opens with non obstante clause to override provision of sub-section (1), it is couched in negative language using expression no collection of tax... , means to prohibit collection of tax at source in cases where goods specified in column (2) of Table below sub-section (1) are sold to be utilized for purposes of manufacturing, processing or producing articles or things ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 13 wp956.19.odt and not for trading purposes. Till 10-1-1996, i.e. impugned action, no tax was collected at source under sub-section (1) of Section 206C of said Act by Forest Department of State Government from members of petitioner-association at time of sale of unprocessed Tendu leaves under impression that exemption under sub-section (1A) therein is available. 12. provision of sub-section (1A) of Section 206C of Income Tax Act, at outset, rules out availability of exemption where processed goods are sold for utilization or for purposes of trading or sale to manufacturer or producer of different articles or things therefrom. In our view, such cases would, therefore, be covered by sub-section (1) only, under which tax is to be collected at source, and failure to collect such tax would attract penal consequences as are provided under Section 271CA of said Act. Not only that, if exemption granted to undeserving and ineligible persons, provision of penalty may be attracted. However, if there is wrongful collection of tax or collection of tax from persons entitled to exemption under sub-section (1A), it is neither offence nor any penalty is attracted. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 14 wp956.19.odt 13. Keeping in view aforesaid position, we are of opinion that provision of sub-section (1A) of Section 206C of Income Tax Act operates as exception to sub-section (1) and it admits exemption from collection of tax at source where goods are utilized for purposes of manufacturing, processing or producing articles or things. Such provision of exemption under taxing statute has to be construed very strictly. If exemption is denied, burden to establish eligibility for exemption has to be discharged by person or assessee who claims benefit of it. 14. Shri C.S. Kaptan, learned Senior Advocate, assisted by Advocate Shri R.S. Kalangiwale, appearing for petitioner, makes distinction between unprocessed Tendu leaves and processed Tendu leave. It is admitted that re-sale of Tendu leaves, as it is without any process, after purchase from Forest Department would amount to trading which does not qualify for exemption under sub-section (1A) of Section 206C of Income Tax Act. It is submission that unprocessed Tendu leaves cannot be utilized for purposes of manufacture or production of bidis and in such case, character of Tendu leaves is not changed. According to Shri Kaptan, processed ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 15 wp956.19.odt Tendu leaves sold are actually utilized for manufacture of bidi, distinct product, which comes into existence, and hence qualify for exemption under sub-section (1A) of Section 206C of said Act. 15. Relying upon decision of Apex Court in case of Chowgule & Co. Pvt. Ltd. and another v. Union of India and others, reported in (1981) 1 SCC 653, it is urged that what is necessary in order to characterize operation as processing is that commodity must, as result of operation, experience change, which does not necessarily bring into existence different product like bidi. nature and extent of change is not material. From said decision, distinction is pointed out between manufacture and processing to urge that it is not necessary that processing of commodity or goods should result in bringing into some different product so as to qualify for grant of exemption under sub-section (1A) of Section 206C of Income Tax Act. 16. Now we proceed to deal with contentions advanced. first contention being that Tendu leaves purchased from Forest Department of State of Maharashtra are processed so that it can be utilized for manufacture of bidi, it is ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 16 wp956.19.odt covered by word processing employed under sub-section (1A) of Section 206C of Income Tax Act. Shri Kaptan does not dispute that identical process carried on Tendu leaves was considered in decisions of several High Courts deciding question as to whether exemption under Section 206C of said Act can be made available and those decisions are - (i) CIT v. Ashwin Kumar Gordhanbhai and Bros. Pvt. Ltd., reported in [1995] 212 ITR 614 (Gujarat); (ii) North Koel Kendu Leaves & Mahulam Leaves v. Union of India, reported in [1997] 228 ITR 630 (Patna); (iii) Abdul Sattar v. Union of India, reported in [1998] 230 ITR 163 (Madhya Pradesh); (iv) Natwarlal v. Union of India, reported in [1998] 233 ITR 490 (Madhya Pradesh); and (v) Sagarmal Agrawal v. Union of India (Uoi) and ors., reported in [1999] 238 ITR 989 (Orissa), taking view that Tendu leaves do not undergo any process, except sprinkling of water to avoid breaking of leaves or brittleness and to preserve its softness, which does not amount to processing within meaning of sub-section (1A) of Section 206 of Income Tax Act. It is held in these decisions that Tendu leaves, in spite of such activities, do not lose its character as Tendu leaves and nothing new emerges from such process. We do not find any reason to deviate from such view. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 17 wp956.19.odt 17. Even assuming that it is processing of Tendu leaves, which is involved in terms of sub-section (1A), we are unable to understand argument as to how purchase and sale of processed Tendu leaves would not constitute trading within meaning of sub-section (1A). There is no restriction that sale of processed or unprocessed Tendu leaves should only be to manufacturer or producer of bidis, and Section 206C of Income Tax Act does not provide for exemption from collection of tax at source, if such Tendu leaves are sold to manufacturer or producer of bidis therefrom. As matter of fact, members of petitioner-association are collecting such tax at source from such manufacturers of bidi, at time of sale of processed leaves and there is no grievance in respect of it. In view of this, even if members of petitioner-association are engaged in sale of such Tendu leaves to manufacturer or producer of bidis, it would be trading, which would not qualify for exemption under sub-section (1A) of Section 206C of Income Tax Act. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 18 wp956.19.odt 18. In fact, it is admitted in petition that members of petitioner-association are registered under Maharashtra Forest Produce (Regulation of Trade) Act, 1969 (for short, Regulation of Trade Act ). They are agents of State Government appointed under sub-section (1) of Section 4 of Regulation of Trade Act for purposes of purchase of and trade in forest produce. business of trading of Tendu leaves by members of petitioner-association is controlled and regulated by Regulation of Trade Act and Rules framed thereunder. members of petitioner-association thus enjoy statutory status as purchasers and traders in forest produce, namely, Tendu leaves from Forest Department of State Government. purchasers and traders of Tendu leaves stand excluded from exemption under sub-section (1A) of Section 206C of Income Tax Act. 19. It is urged that several decisions of High Court cited above on question of exemption under Section 206C of Income Tax Act follow decision of Apex Court in case of Chowgule & Co. Pvt. Ltd., cited supra. According to him, ratio of this decision of Apex Court has been misconstrued. He submits that decision of Apex Court in fact operates ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 19 wp956.19.odt in favour of petitioner, holding that what is necessary in order to characterize operation as processing is that commodity must, as result of operation, experience some change, which does not necessarily bring into existence different product, like bidi. distinction made by Apex Court between manufacture and processing has been ignored. 20. We have gone through decision of Apex Court in Chowgule & Co. s case, cited supra. claim in said decision was for lower rate of 3% of sales tax on turnover under Sections 8(1)(b) and 8(3)(b) of Central Sales Tax Act, 1956. What required under these provisions was, class or classes of goods specified in certificate of registration of registered dealer purchasing goods as being intended for re-sale by him or for use by him in manufacture or processing of goods for sale or in mining. In absence of such certification, amount payable was at much higher rate. 21. claim of assessee in aforesaid decision of Apex Court for certificate of registration, was rejected; however, in appeal, revision and ultimately in writ petition, out of claim in respect of 36 items, claim for 22 items was held ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 20 wp956.19.odt admissible, whereas for remaining 14 items, it was rejected. assessee as well as Department both were before Apex Court by filing separate proceedings challenging orders passed to extent operated against them. Apex Court allowed appeal filed by assessee and remanded matter to Sales Tax Officer to examine 14 items of goods and determine in light of principles laid down in judgment as to whether these items are liable to be included in certificate of registration so as to qualify for lesser tax at rate of 3%. appeal filed by Department was, however, dismissed. 22. assessee in Chowgule & Co. Pvt. Ltd. s case was private limited company carrying on business of mining iron ore and selling it in export market after dressing, washing, screening and blending it. ore was to be supplied to foreign buyers in accordance with specifications required by them and, therefore, blending of ore, mined by it was carried out in such manner as to produce ore of required chemical and physical composition. entire activity of assessee was broadly divided into seven different operations, one following upon other, namely, (i) extraction of ore from mine; (ii) conveying ore to dressing plant; (iii) washing, screening ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 21 wp956.19.odt and dressing ore; (iv) conveying of ore from mine site to riverside; (v) transport of ore from riverside to harbour by means of barges; (vi) stacking of ore at harbour in different stockpiles according to its physical and chemical composition; and (vii) blending of ore from different stockpiles with view to producing ore of required specifications and loading it into ship by means of mechanized ore handling plant. 23. In Para 4 of said decision, Apex Court primarily considered two questions - (i) whether blending of ore whilst loading it in ship by means of mechanical ore handling plant constituted manufacture or processing of ore for sale within meaning of Section 8(3)(b) of Central Sales Tax Act and Rule 13 of Rules framed thereunder, and (ii) whether process of mining, conveying mined ore from mining site to riverside, carrying it by barges to Marmagoa harbour and then blending and loading it into ship through mechanical ore handling plant constituted one integrated process of mining and manufacture or processing of ore for sale, so that items of goods purchased for use in every phase of this integrated operations could be said to be goods purchased for use in mining and manufacturing or ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 22 wp956.19.odt processing of ore for sale falling within scope and ambit of Section 8(3)(b) and Rule 13. 24. In Chowgule & Co. Pvt. Ltd. s case, eligibility to claim lower rate of sales tax was that goods of class or classes purchased by registered dealer, as being intended for re-sale by him, for use by him in manufacture or processing of goods for sale or mining. Court held as under : (a) Blending of ore whilst loading it in ship by means of mechanical ore handling plant did not constitute process of manufacture, as it did not bring into existence commercially different and distinct commodity. (b) When chemical and physical composition of each kind of ore, which goes into blending, is changed, such operation in course of loading through mechanical ore handling plant amounted to process of ore for sale within meaning of Section 8(3)(b) of Central Sales Tax Act read with Rule 13 of Rules framed thereunder. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 23 wp956.19.odt (c) If any items of goods were purchased, as being intended for use as machinery, plant, equipment, tools, spare parts, stores, accessories, fuel, lubricants, etc., for mechanical ore handling plant for use in process of goods for sale, same would also be eligible for inclusion. (d) items of goods purchased by assessee for use in carrying ore from mining site to riverside and from riverside to Marmagoa harbour could not be regarded as goods purchased for use in mining. It is held that requirement of Section 8(3)(b) and Rule 13 is that goods must be purchased for use in mining and not use in business of mining . (e) It is held that where dealer is engaged both in mining operation as also in processing mined ore for sale, two processes being inter-depended, it would be essential for carrying on operation of processing that ore should be carried from mining site where mining operations comes to end to place ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 24 wp956.19.odt where processing is carried on and that would clearly be integral part of operation of processing, and if any machinery, vehicles, barges and other items of goods are used for carrying ore from mining site to place of processing, they would also be goods used in processing of ore for sale. 25. In Chowgule & Co. Pvt. Ltd. s case, observations that processing must result in some change which does not necessarily bring into existence different produce, like bidi, relied upon by Shri Kaptan are made in background that Court was considering eligibility criteria for lower rate of sales tax under Section 8(3)(b) of Central Sales Tax Act, interpreting expression processing of goods for sale , which means making commodity marketable by experiencing some change, as is distinguished from process of manufacturing, which actually brings into existence commercially different and distinct commodity by different name. In our view, such observations of Apex Court would be of no help to petitioner on question of process of manufacturing. ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 25 wp956.19.odt 26. We would also like to deal with language employed under sub-section (1A) of Section 206C of Income Tax Act in light of intention of Legislature in granting such exemption. Once availability of exemption, where goods are processed for purposes of trading or selling to manufacturer or producer of different articles or things therefrom, is ruled out under sub-section (1A), intention of Legislature becomes clear to understand word processing , as intermediary process to qualify produce, namely, Tendu leaves, for being utilized for purposes of manufacture or production of articles or things therefrom. It is integrated process of manufacture or producing bidi in this case, from processed Tendu leaves, which qualifies for exemption. placement of word processing in between manufacturing and or producing articles or things under sub-section (1A) is also significantly indicate such intention of Legislature. processing of Tendu leaves in this case may qualify for purposes of trading or sale, but not for utilization for purposes of manufacture of bidis. 27. Section 11 of Regulation of Trade Act deals with registration of manufacturer of finished goods using forest produce, who has to get himself registered with ::: Uploaded on - 19/09/2019 ::: Downloaded on - 26/09/2019 11:33:05 ::: 26 wp956.19.odt concerned Department of State Government in manner provided under Rule 9 of Rules framed under Regulation of Trade Act. It is not claim of petitioner-association that they are also manufacturers of bidi and Tendu leaves purchased by them from Forest Department of State Government are processed for utilization in process of manufacture of bidi. It is not integral part of process of manufacture of bidi. It is thus clear that unless members of petitioner-association get themselves registered as manufacturers of bidi under Section 11 of Regulation of Trade Act, it cannot be said that they are utilizing processed Tendu leaves for purposes of manufacture of bidi. expression processing under sub-section (1A) will have, therefore, to be necessarily understood as intermediary process in manufacture of bidi. 28. In view of above, we do not find any substance in challenge raised in this petition, which is dismissed. Rule stands discharged. No order as to costs. [Vinay Joshi, J.] [R.K. Deshpande, J.] Lanjewar, PS Gondia Beedi Leaves Contractors Association v. Union of India/Principal CCIT, New Delhi/JCIT (TDS), Nagpur/State of Maharashtra/The Principal Chief Conservator of Forests/APCCF, Nagpur/DCF Gadchiroli/ DCF Brahmapuri/CIT (TDS), Nagpur