Manufacture requires a commercially distinct marketable commodity; site-made concrete for immediate use was not manufacture.

Mixing sand, cement, metal and water to prepare concrete at the construction site did not amount to manufacture for purchase tax purposes because the process did not produce a commercially distinct and marketable commodity. The test applied was whether the input materials were transformed into a separate commercial article capable of being sold or supplied in the market as such. As the concrete mixture was prepared for immediate use in construction and was not ordinarily treated as a tradeable commodity, the purchase tax provision was not attracted and liability did not arise on that footing.

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Issues: (i) whether mixing sand, cement, metal and water to prepare concrete mixture amounted to manufacture within the meaning of the sales tax law so as to attract purchase tax on sand used in that process; (ii) whether, for an activity to constitute manufacture, the resulting product must be a commercially marketable commodity different from the input materials.

Issue (i): whether mixing sand, cement, metal and water to prepare concrete mixture amounted to manufacture within the meaning of the sales tax law so as to attract purchase tax on sand used in that process.

Analysis: Purchase tax under the relevant provision applied when goods purchased from an unregistered dealer were used within the State in the manufacture of goods. Manufacture was defined broadly, but the determining question was whether the process produced a commercially different article. The concrete mixture in question was prepared at the site for immediate use in construction, was not ordinarily sold as a marketable commodity, and was not treated in trade as a distinct commercial article.

Conclusion: The process did not amount to manufacture for the purpose of the purchase tax provision, and the assessee was not liable to purchase tax on that footing.

Issue (ii): whether, for an activity to constitute manufacture, the resulting product must be a commercially marketable commodity different from the input materials.

Analysis: The governing test applied was whether the processing brought into existence a commercially distinct commodity. A mere change in form, composition, or identity was insufficient unless the end product was itself a commercial commodity capable of being sold or supplied in the market as such. Applying that test, the concrete mixture prepared for immediate use lacked the character of a marketable commodity and therefore could not satisfy the statutory concept of manufacture.

Conclusion: Yes, manufacture requires the emergence of a commercially different and distinct commodity, and that requirement was not met here.

Final Conclusion: The references were answered in favour of the assessee, with the Tribunal's view upheld and the levy of purchase tax and penalty set aside.

Ratio Decidendi: For sales tax purposes, an activity amounts to manufacture only if it results in a commercially distinct and marketable commodity; a product prepared for immediate consumption at site and not ordinarily sold in the market does not satisfy that test.

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