Substantial identity in processed goods bars repeated sales tax where purification does not create a new commercial commodity.

Carbon dioxide retained its identity as the same goods after removal of impurities and improvement in purity, so the processing did not create a new commercial commodity for sales tax purposes. The entry taxing gases did not establish a separate taxable class based on grades or degrees of purity, and substantial identity remained between the goods purchased and resold. Mere enhancement of quality or suitability for use was not enough to amount to manufacture of a different commodity. The burden to prove a change in commercial identity lay on the Revenue, and that burden was not discharged, so repeated levy under the single-point entry was not permissible.

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Issues: Whether carbon dioxide, after removal of impurities and improvement in purity by the assessee, ceased to be the same goods and became a different commercial commodity so as to attract sales tax again under entry 106 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The goods purchased and resold remained carbon dioxide notwithstanding the processing undertaken to remove impurities and improve purity. The entry taxed gases as such and did not create a separate taxable category based on grades or degrees of purity. On the facts, there was substantial identity between the commodity purchased and the commodity sold, and no material showed that the processed gas had acquired a distinct commercial identity in the market. Mere processing to improve quality or make the gas suitable for use did not, by itself, amount to manufacture of a different commodity. The burden lay on the Revenue to establish a change in identity, and that burden was not discharged.

Conclusion: The processed carbon dioxide was not a different commercial commodity, and the second sale could not be subjected to tax again under entry 106. The revision was therefore allowed in favour of the assessee.

Ratio Decidendi: Where the identity of goods remains substantially unchanged despite processing or improvement in quality, the goods do not become a new commercial commodity for sales tax purposes, and repeated levy under the same single-point entry is not permissible.

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