Manufacture test for spectacles and statutory assessment procedure: no manufacturing dealer status, and liability must follow prescribed assessment.

Assembling optical frames and fitting prescription lenses was held not to constitute manufacture, because manufacture requires emergence of a commercially new and distinct article with a different name, character or use; the activity therefore did not qualify the dealer for treatment as a manufacturing dealer under the sales tax law. The court also held that tax liability and the period from which it arises must be determined through the statutory assessment procedure, and fixation of liability under section 4(2) without completing the assessment contemplated by section 11(2) was unsustainable and without jurisdiction.

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Issues: (i) Whether assembling optical frames and fitting prescription lenses amounted to manufacture of spectacles so as to attract the lower taxable quantum applicable to a manufacturing dealer under the sales tax law. (ii) Whether the liability to tax could be fixed under section 4(2) without completing the assessment contemplated by section 11(2).

Issue (i): Whether assembling optical frames and fitting prescription lenses amounted to manufacture of spectacles so as to attract the lower taxable quantum applicable to a manufacturing dealer under the sales tax law.

Analysis: Manufacture requires more than a mere change in form or assembly of parts; a new and different commercial article must emerge with a distinct name, character or use. Applying that test, the activity of selecting a frame, fitting lenses according to prescription, and selling the finished article did not amount to manufacture. The transaction did not involve transformation into a new product in the legal sense required by the Act.

Conclusion: The petitioner was not a manufacturer of spectacles and was therefore not liable to be treated as a manufacturing dealer for the lower taxable quantum.

Issue (ii): Whether the liability to tax could be fixed under section 4(2) without completing the assessment contemplated by section 11(2).

Analysis: Liability to tax and the period from which it arises had to be determined in the statutory manner prescribed by the Act. Where the dealer had not been duly brought within the assessment process contemplated by section 11(2), an independent fixation of liability under section 4(2) was not in accordance with the statutory mode and was unsustainable.

Conclusion: The fixation of liability without completing the assessment under section 11(2) was erroneous and without jurisdiction.

Final Conclusion: The impugned orders were set aside and the petitioner obtained relief because the court held that he was not a manufacturing dealer and that tax liability could not validly be fixed outside the prescribed assessment procedure.

Ratio Decidendi: A dealer cannot be treated as a manufacturer unless the process results in a commercially new and distinct article, and tax liability must be determined strictly in the manner prescribed by the statute.

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