Commercial identity test treats lime shell conversion into shell grit as manufacture, attracting purchase tax.

Grinding lime shell into shell grit was treated as manufacture because the process produced a new commodity with a distinct commercial identity. Applying the commercial parlance test, the Court noted that lime shell could not be used as poultry feed in its original form, while shell grit could be so used. The conversion was therefore consumption of the original goods in the manufacture of other goods, attracting purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959. The deletion of the turnover was held to be incorrect.

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Issues: Whether grinding lime shell into shell grit resulted in manufacture of a new and distinct commodity so as to attract purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959 and justify deletion of the turnover.

Analysis: The turnover arose from purchase of lime shell without supporting bills, which was later converted into shell grit used as poultry feed. The Tribunal had treated the process as mere grinding and held that the original lime shell and the resultant shell grit were the same commodity. The Court applied the commercial parlance test and the principle that a commodity is manufactured when processing brings into existence a new and distinct product that is no longer regarded as the original commodity. It found that lime shell could not be used as poultry feed in its original form, whereas shell grit could be so used, and therefore the resultant product had a different commercial identity. On that basis, the conversion was treated as consumption of the original goods in the manufacture of other goods.

Conclusion: The conversion of lime shell into shell grit amounted to manufacture of a different commodity, section 7-A was attracted, and the deletion of the turnover was incorrect.

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