Slitting paper rolls into narrower reels was not manufacture because no commercially different commodity emerged, so purchase tax did not arise.

Smaller-width paper reels produced by slitting larger paper rolls were treated as the same commercial commodity, not a commercially different product. On that basis, the slitting process was not regarded as manufacture under the relevant sales tax definition, so the alleged contravention of form 14 and purchase tax liability did not arise. The stated ratio is that a process which merely reduces the size of an existing commodity, without creating a new commercially distinct product, does not amount to manufacture for sales tax purposes.

---

---

Issues: Whether the paper reels of smaller width prepared by slitting larger paper rolls were a commercially different commodity and whether such slitting amounted to manufacture so as to attract contravention of form 14 and purchase tax liability.

Analysis: The reference was decided on the basis that the activity in question and the commodity involved were identical to those considered in an earlier reference concerning the same assessee. In view of that prior determination, the smaller-width paper reels were treated as not constituting a commercially different commodity from the larger paper rolls from which they were made. The process of slitting was therefore not treated as manufacture within the meaning of the relevant statutory definition, with the consequence that the alleged contravention of form 14 and the claim to purchase tax did not arise.

Conclusion: The question was answered in the affirmative and in favour of the assessee; the slitting process did not amount to manufacture and no purchase tax was payable.

Ratio Decidendi: Where a process merely reduces the size of the same commodity without bringing into existence a commercially different product, it does not amount to manufacture for sales tax purposes.

---