Firewood processing is not manufacture where cutting trees into pieces does not create a new commercial product.

Felling trees, chopping them into pieces, and selling the material as firewood did not amount to manufacture because the process did not produce a new commercially distinct article with a different name, character, or use. The application of labour alone was insufficient where the essential identity of the goods remained firewood and the product continued to serve as fuel wood. On that basis, the assessee-firm was not carrying on a manufacturing business and could not be treated as a manufacturer for the relevant sales tax threshold.

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Issues: Whether the assessee-firm's activity of felling trees, chopping them into pieces, and selling them as firewood amounted to a manufacturing business so as to make it a manufacturer for the purpose of the taxable quantum under section 4 of the Punjab General Sales Tax Act, 1948.

Analysis: The relevant test was whether the process applied to the goods brought about a transformation resulting in a new and different commercial article having a distinctive name, character, or use. Mere chopping or cutting of trees into smaller pieces did not change the essential character of the material, which remained firewood. The application of labour to an article does not amount to manufacture unless a commercially distinct product emerges. Since the trees, whether sold whole or cut into pieces, continued to be used as fuel wood, no manufacture took place.

Conclusion: The assessee-firm was not carrying on a manufacturing business and could not be treated as a manufacturer; the liability to pay tax arose at Rs. 50,000 and not Rs. 10,000.

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