Commercially distinct product test applied to bone-meal made from raw bones, making the purchase turnover taxable.

Raw bones purchased and converted into bone-meal for sale as fertiliser were held liable to purchase tax under section 5A of the Kerala General Sales Tax Act, 1963, because the processing consumed the goods in manufacture and produced a commercially distinct product. The controlling test applied was whether the processed article acquired an independent market identity from the original commodity; bone-meal was treated as a new, marketable commodity different from raw bones. On that basis, the purchase turnover was taxable, the assessee's contention failed, and the reassessment orders were restored, with the remand for the 1978-79 assessment year continuing on the remaining issues.

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Issues: Whether raw bones purchased and converted into bone-meal for sale as fertiliser are liable to purchase tax under section 5A of the Kerala General Sales Tax Act, 1963.

Analysis: Liability under section 5A(1)(a) arises when goods purchased are consumed in the process of manufacture and the result is the manufacture of other goods for sale. The controlling test is whether the processed product acquires a commercially distinct identity from the original commodity. Applying that test, the conversion of raw bones into bone-meal involves crushing and powdering which brings into existence a new marketable product recognised in trade as fertiliser. Bone-meal is commercially distinct from raw bones, and the latter cannot retain the same identity after such processing.

Conclusion: The purchase turnover of raw bones is liable to tax under section 5A, and the assessee's contention fails.

Final Conclusion: The revision was allowed and the reassessment orders were restored, while the remand for the assessment year 1978-79 continued for the remaining issues.

Ratio Decidendi: Where processing of purchased goods results in a commercially distinct and separate commodity, the goods are treated as consumed in manufacture and are taxable under section 5A.

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