Commercial commodity test rejects treating exercise books as distinct from paper in sales tax declaration breach dispute

Exercise books made from paper purchased free of tax on declaration were not treated as a different commercial commodity from the paper itself. The Supreme Court had already reversed the earlier view in the same line of litigation, and that reasoning applied here as well: converting paper into exercise books did not create a distinct commodity for the sales tax consequence arising from breach of the declaration. The Tribunal was therefore not justified in treating the exercise books as separate from the purchased paper, and the reference was answered in favour of the assessee.

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Issues: Whether exercise books prepared out of paper purchased free of tax by giving declaration were a different commodity from the purchased paper for the purpose of the sales tax reference.

Analysis: The question had already been determined by the Supreme Court in the same line of litigation, where the earlier High Court view treating paper and exercise books as distinct commodities had been reversed. In the present reference, the same factual and legal position applied, namely that paper converted into exercise books did not justify treating the two as commercially different commodities for the consequence drawn from breach of the declaration.

Conclusion: The Tribunal was not justified in treating exercise books prepared out of paper as a different commodity from paper, and the question was answered in the negative in favour of the assessee.

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