Distinct commodities in production: milling paddy into rice counts as consumption and supports purchase tax under the statute.

Paddy and rice are treated as commercially distinct commodities because milling paddy into rice creates a new article for sale, so the process falls within "manufacture of other goods" under the purchase-tax provision. The term "consumes" is read in an economic sense and includes use of raw material at an intermediate stage of production, meaning paddy is consumed when converted into rice. A levy is not barred as double taxation merely because paddy and rice are taxed at different stages, since they are different goods. On that reasoning, purchase tax applies to the purchase turnover of paddy used in milling.

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Issues: (i) Whether paddy and rice are distinct commodities so that milling paddy into rice amounts to manufacture of other goods for sale and attracts purchase tax under section 6(i); (ii) Whether the word "consumes" in section 6(i) includes use of raw material in an intermediate stage of production in the economic sense; (iii) Whether levy of purchase tax is barred as double taxation where paddy and rice are taxed at different stages.

Issue (i): Whether paddy and rice are distinct commodities so that milling paddy into rice amounts to manufacture of other goods for sale and attracts purchase tax under section 6(i).

Analysis: Paddy loses its identity on dehusking and rice is commercially and ordinarily known as a different article. Milling paddy into rice is therefore not a mere continuation of the same commodity but a process that results in a new commercial commodity. The statutory expression "manufacture of other goods" is satisfied when the raw material is transformed into a different for sale.

Conclusion: Paddy and rice are distinct commodities, and milling paddy amounts to manufacture of other goods for sale; the levy under section 6(i) applies.

Issue (ii): Whether the word "consumes" in section 6(i) includes use of raw material in an intermediate stage of production in the economic sense.

Analysis: Consumption is not confined to final personal use. In a production chain, raw material is consumed whenever utility is added at an intermediate stage and the material is put to productive use for transformation into a further commodity. The word "consumes" in section 6(i) must therefore be understood in this economic sense, covering use of paddy by the miller in producing rice.

Conclusion: The assessees consumed the paddy when they converted it into rice, and section 6(i) is attracted.

Issue (iii): Whether levy of purchase tax is barred as double taxation where paddy and rice are taxed at different stages.

Analysis: The levy does not amount to double taxation on the same commodity because paddy and rice are different goods. Taxation at two different stages of two different commodities is not prohibited merely because the second commodity is produced from the first.

Conclusion: The plea of impermissible double taxation fails.

Final Conclusion: The purchase turnover of paddy used in converting it into rice is chargeable to purchase tax under section 6(i) of the Karnataka Sales Tax Act, 1957, and the assessee's challenge fails.

Ratio Decidendi: Where raw material is transformed into a commercially distinct commodity in the course of business, the material is "consumed" for the purpose of a purchase-tax provision and the levy is not barred merely because the two commodities are taxed at different stages.

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