Manufacture under sales tax law requires a commercially different commodity; slitting paper reels did not meet that test.

Slitting larger paper reels into smaller reels did not amount to manufacture under section 2(17) of the Bombay Sales Tax Act, 1959, because manufacture requires the emergence of a commercially different commodity. The Court held that Rule 3 of the Bombay Sales Tax Rules, 1959, did not by itself convert the process into manufacture. On the evidence, both reel sizes remained paper, were capable of the same normal use, and there was no material showing that the market treated them as different commodities. The revenue failed to discharge the burden of proving commercial distinctiveness, so the smaller reels were not treated as a separate commodity.

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Issues: Whether slitting larger paper reels into smaller reels resulted in manufacture under section 2(17) of the Bombay Sales Tax Act, 1959, and whether the smaller reels were commercially a different commodity from the larger reels.

Analysis: The definition of manufacture in section 2(17) is wide and includes processing, but the activity must result in a commodity commercially different from the original commodity. The fact that the process of slitting was not excluded by Rule 3 of the Bombay Sales Tax Rules, 1959, did not by itself make it manufacture. On the evidence, the smaller reels and larger reels remained paper, capable of the same normal use, and there was no material to show that the market treated them as different commodities. The burden lay on the revenue to establish commercial distinctiveness, and it failed to do so.

Conclusion: The slitting of larger paper reels into smaller reels did not amount to manufacture, and the smaller reels were not a different commercial commodity from the larger reels.

Ratio Decidendi: For an activity to amount to manufacture under the sales tax definition, it must produce a commercially different commodity; mere processing or change in form is insufficient if the essential commercial identity remains the same.

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