Processing becomes manufacture only when it creates a commercially different article with new qualities, the Court held.

London sales were treated as includible in the assessee's turnover for U.P. sales tax purposes, following the reasoning applied in the connected reference, and the issue was decided in favour of Revenue. Processing of bristles by boiling, washing, cleaning, sorting, grouping, tying and clipping was held not to amount to manufacture because it did not create a commercially different article or impart new form, properties or qualities; the manufacture-based taxing provision was therefore inapplicable, and this issue was decided in favour of the assessee.

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Issues: (i) Whether sales made outside the State at London were to be included in the sales made in U.P. for fixing gross turnover and determining liability to tax. (ii) Whether the assessee's processing of bristles amounted to manufacture so as to attract Explanation II(ii) to section 2(h) of the U.P. Sales Tax Act.

Issue (i): Whether sales made outside the State at London were to be included in the sales made in U.P. for fixing gross turnover and determining liability to tax.

Analysis: The question was answered by following the reasoning already adopted in the connected reference decided the same day. On that basis, the London sales were treated as includible for the purpose stated in the reference.

Conclusion: The issue was answered in the affirmative, in favour of Revenue.

Issue (ii): Whether the assessee's processing of bristles amounted to manufacture so as to attract Explanation II(ii) to section 2(h) of the U.P. Sales Tax Act.

Analysis: The processing consisted of boiling, washing, cleaning, sorting, grouping, tying, and clipping the bristles. The Court held that these operations did not produce a commercially different article. The bristles remained bristles, and no new form, properties, or qualities were imparted so as to constitute manufacture. The statutory expression was therefore held inapplicable.

Conclusion: The issue was answered in the negative, in favour of the assessee.

Final Conclusion: The reference was answered by upholding inclusion of the London sales for turnover purposes, but rejecting the contention that the bristles had been manufactured so as to attract the relevant taxing provision.

Ratio Decidendi: Processing amounts to manufacture only when it results in a commercially different article with new form, properties, or qualities.

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