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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether sieving purchased grit into graded stone chips amounted to manufacture, and whether the resulting sales could be treated as resale of the goods in the same form so as to qualify for deduction under the sales tax law.
Analysis: The purchase was of grit, but the commodity was subjected to removal of dust and sieving through different meshes, resulting in stone chips of smaller and more uniform sizes sold as kapchi. The Court held that "same form" refers to the visible aspect in which the goods exist or manifest themselves, and that once the goods are processed so that a new commercial commodity emerges with a distinct name and distinct use, the sale is no longer of the purchased goods in the same form. Applying the wide definition of manufacture, the Court found that the process altered the goods and brought into existence a distinct commercial article, stone chips, used differently from grit.
Conclusion: The process amounted to manufacture and the sales were not resale within the meaning of the Act; the assessee was not entitled to deduction under section 10(1)(ii).
Final Conclusion: The reference was answered against the assessee and in favour of the State, with no order as to costs.
Ratio Decidendi: Where processing of purchased goods brings into existence a distinct commercial commodity with a different name and use, the goods are not sold in the same form and the activity amounts to manufacture for sales tax purposes.
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