Manufacture of rolled steel sections attracts purchase tax, while declared goods limits are not breached by mutually exclusive taxation.

Rolling iron or steel scrap into rolled steel sections is treated as manufacture because the process produces a distinct commercial commodity from the raw material. Goods purchased for that purpose are therefore acquired for use in manufacturing goods for sale, attracting purchase tax under the Punjab General Sales Tax Act, 1948. The restriction on declared goods under section 15(a) of the Central Sales Tax Act is not breached because sales tax and purchase tax operate in mutually exclusive situations, and are not levied cumulatively on the same transaction or at more than one stage on the same goods in the same condition. The tax challenge is rejected.

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Issues: (i) Whether rolling iron or steel scrap into rolled steel sections amounts to manufacture so as to attract purchase tax under the Punjab General Sales Tax Act, 1948. (ii) Whether levy of sales tax or purchase tax on iron and steel goods offended the restriction that tax on declared goods shall not exceed two per cent and shall not be levied at more than one stage under the Central Sales Tax Act, 1956.

Issue (i): Whether rolling iron or steel scrap into rolled steel sections amounts to manufacture so as to attract purchase tax under the Punjab General Sales Tax Act, 1948.

Analysis: The conversion of iron or steel scrap into rolled steel sections results in a different commercial commodity. Rolled steel sections are treated as a separate class of goods from the raw material used for their production, and the process of rolling brings into existence a new commodity. Goods acquired for that purpose are purchased for use in the manufacture of goods for sale within the meaning of section 2(ff) as amended.

Conclusion: The process amounts to manufacture and the petitioners are liable to purchase tax on such purchases.

Issue (ii): Whether levy of sales tax or purchase tax on iron and steel goods offended the restriction that tax on declared goods shall not exceed two per cent and shall not be levied at more than one stage under the Central Sales Tax Act, 1956.

Analysis: The scheme of the statute does not result in sales tax and purchase tax being levied together on the same transaction or at more than one stage on the same commodity in the same condition. Where sales tax is attracted on a sale to an ordinary consumer, purchase tax is not attracted, and where purchase tax is attracted on a sale to a manufacturer, sales tax is not attracted. Further, once steel is rolled into rolled steel sections, the resultant commodity is different, and tax on its sale is not a second levy on the same goods. The statutory restriction in section 15(a) is therefore not breached.

Conclusion: The challenge based on multiple-stage taxation and the two per cent ceiling fails.

Final Conclusion: The writ petitions were not maintainable on the grounds urged, and the tax demand was upheld.

Ratio Decidendi: A commodity produced by a manufacturing process that emerges as a distinct commercial article is taxable as the manufactured product, and the restriction on declared goods under section 15(a) is not violated where sales tax and purchase tax operate in mutually exclusive circumstances rather than cumulatively on the same sale or purchase.

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