Mere change in timber form is not manufacture; purchase tax cannot apply without a new commercial commodity.

Cutting or sawing timber into logs, planks, rafters and similar forms does not amount to manufacture or to consumption in the manufacture of other goods for purchase tax purposes under section 6 of the Karnataka Sales Tax Act, 1957. The controlling test is whether a new and distinct commercial commodity emerges with a different name, character or use; here, timber retains its commercial identity and only its form changes to make it marketable. The explanation to section 6 cannot be stretched to cover a mere change in form, and the Second Schedule classification or departmental circulars cannot enlarge the charging provision. Purchase tax on that basis is impermissible.

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Issues: Whether cutting or sawing timber into logs, planks, rafters and similar forms amounts to consumption of timber in the manufacture of other goods so as to attract purchase tax under section 6 of the Karnataka Sales Tax Act, 1957.

Analysis: Section 6 applies only where goods purchased without levy of tax are consumed in the manufacture of other goods or otherwise consumed in the statutory sense. The controlling test is whether a new and distinct commercial commodity emerges with a different name, character or use. Timber sawn into logs, planks, rafters and similar forms retains its commercial identity as timber; the process only changes its form and makes it suitable for marketing. No manufacturing activity producing a new commodity is involved, and the explanation to section 6 cannot be extended to cover a mere change in form undertaken for sale. The classification of timber in the Second Schedule and departmental circulars cannot enlarge the charging provision.

Conclusion: Cutting or sawing timber into such forms does not amount to manufacture or consumption in manufacture, and section 6 is not attracted. The levy of purchase tax on that basis is impermissible and the finding is in favour of the assessee.

Final Conclusion: The petitions succeed and the assessment or reassessment proceedings inconsistent with this view are liable to be modified accordingly.

Ratio Decidendi: A mere change in the form of a commodity, without emergence of a new and distinct commercial article, does not constitute manufacture or consumption in manufacture for the purposes of a purchase tax charging provision.

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