Manufacture by conversion of scrap iron into rods and angles attracts purchase tax; conditional exemption does not bar levy.

Conversion of scrap iron into iron rods and angles was treated as manufacture because the statutory definition of manufacture in the M.P. General Sales Tax Act, 1958 was construed broadly to cover processes producing or making goods. On that basis, the scrap iron was regarded as used or consumed in manufacturing activity, attracting purchase tax. The Court also held that a conditional sales tax exemption did not negate the underlying taxability of the goods, and the transformed product was a distinct commercial commodity for sales tax purposes. Accordingly, the challenge to the levy, revisional orders and penalty failed, and the tax and penalty were sustained.

---

---

Issues: Whether scrap iron purchased by the dealer and converted into iron rods and angles constituted use or consumption in manufacture so as to attract purchase tax under the M.P. General Sales Tax Act, 1958, and whether the levy and penalty were liable to be quashed.

Analysis: The definition of manufacture in section 2(g) of the M.P. General Sales Tax Act, 1958 was construed broadly to include any process of producing or making goods. Conversion of one category of iron and steel into another was held to amount to manufacture. Reliance was placed on the statutory scheme of levy under sections 6(1) and 7(1) of the M.P. General Sales Tax Act, 1958, together with the classification of iron and steel under section 14 of the Central Sales Tax Act, 1956. The distinction between exemption from sales tax on specified sales and non-liability to tax was rejected, and it was held that exemption was conditional and did not negate the underlying taxability of the goods. The Court also treated scrap iron transformed into rods and angles as a different commercial commodity for sales tax purposes.

Conclusion: The dealer's contention that purchase tax was not leviable failed, and the challenge to the revisional orders and penalty was rejected.

Final Conclusion: The petition was dismissed because the purchase of scrap iron was connected with manufacturing activity and the impugned tax and penalty orders were sustained.

Ratio Decidendi: Conversion of scrap iron into rods and angles is manufacture, and a conditional exemption from sales tax does not prevent levy of purchase tax where the goods are used or consumed in that manufacturing process.

---