Manufacture requires a commercially new commodity; reducing dye strength without changing identity is only resale.

Mixing dyes with gobar salt, soda-bi-carb and soda-ash to reduce strength did not amount to manufacture because the process did not create a commercially new and distinct commodity. The article applies the settled test that manufacture exists only when processing changes the original article into something commercially different; mere treatment, manipulation, or reduction in concentration without loss of essential identity is insufficient. On that reasoning, the dyes remained dyes in commercial sense and the transactions were treated as resales rather than manufactured goods, so the claimed deduction for purchases from registered dealers was available under the Gujarat Sales Tax Act, 1969.

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Issues: Whether mixing dyes with gobar salt, soda-bi-carb and soda-ash to reduce strength amounts to manufacture or merely resale of goods, and whether the assessee is entitled to deduction of purchases from registered dealers under the Gujarat Sales Tax Act, 1969.

Analysis: The decisive test is whether, after the process is applied, the original commodity ceases to be commercially the same article and comes to be recognised as a new and distinct commodity. Mere treatment or manipulation does not amount to manufacture unless a transformation occurs and a commercially different product emerges. On the facts, reducing the strength or concentration of dyes by adding inert substances did not change the essential character of the dyes; the product remained dyes in commercial sense, though of reduced strength. The process therefore did not result in manufacture, and the sales remained resales.

Conclusion: The process did not amount to manufacture and the assessee was entitled to the claimed deduction; the answer was in favour of the assessee and against the State.

Ratio Decidendi: Manufacture takes place only when processing brings into existence a commercially new and distinct commodity, and mere reduction in strength or concentration without loss of essential identity does not satisfy that test.

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