Expanded manufacture definition covers prescribed herbal medicines, making the first seller liable as manufacturer for sales tax.

The U.P. Sales Tax Act's definition of "manufacture" was treated as an expanded statutory concept covering producing, making, altering, processing, treating and adapting goods. On that basis, medicines prepared from kirana goods and herbs in the proportions stated in a hakim's prescription were regarded as manufactured pharmaceutical preparations. The dealer making the first sale after such preparation was treated as the manufacturer under the statutory scheme, so the turnover of those first sales attracted tax under the relevant schedule entry for medicines and pharmaceutical preparations.

---

---

Issues: Whether the preparation of medicines from kirana goods and herbs on the basis of a hakim's prescription amounted to manufacture under the U.P. Sales Tax Act, and whether the assessees, having made the first sale after such preparation, were liable to tax on the turnover of those medicines.

Analysis: The definition of "manufacture" in section 2(e-1) of the U.P. Sales Tax Act, 1948 was held to be an artificial and expanded definition, extending beyond the ordinary notion of bringing into existence a commercially different commodity. It expressly included producing, making, altering, processing, treating and adapting goods. On that footing, medicines prepared by mixing ingredients in the proportions indicated in a prescription were treated as pharmaceutical preparations made or adapted for specific use. Once such goods were manufactured, section 2(ee) treated the dealer making the first sale in the State as the manufacturer, and item 55 of the First Schedule attracted tax on medicines and pharmaceutical preparations at the point of sale by the manufacturer or importer. Earlier decisions applying the common-parlance meaning of manufacture were held inapposite because they did not consider this statutory definition.

Conclusion: The preparation of the prescribed medicines was manufacture within section 2(e-1), the assessees were manufacturers within section 2(ee), and the turnover of their first sales was taxable under section 3-A and item 55 of the First Schedule.

Final Conclusion: The revisions succeeded for the Revenue and the Tribunal's contrary view was set aside, with the original assessments restored.

Ratio Decidendi: Where the sales tax statute defines manufacture in expanded terms to include processing, treating and adapting goods, the existence of a new commercially distinct commodity is not indispensable; goods prepared by such statutory processes are manufactured goods for tax purposes, and the first seller after such preparation is liable as the manufacturer.

---