Double taxation on rejected steel materials barred where goods were resold without any manufacturing process.

Locally purchased defective coils, end cuttings and rejected steel materials that were merely segregated and sold without any manufacturing process could not be taxed again where tax had already been paid at purchase. The court distinguished such items from manufactured commodities, holding that the rule on different commercial products arising out of manufacture did not apply because there was no transformation of the goods. However, the denial of set-off was sustained on the footing that no manufacturing activity was undertaken in relation to those items. The matter was remitted for exclusion of the relevant local purchases from the tax computation.

---

---

Issues: Whether locally purchased defective coils, end cuttings and rejected steel materials, which were sold without any manufacturing process and had already suffered tax at the purchase stage, could be subjected to tax again, and whether set-off on such purchases was correctly denied.

Analysis: The goods sold as defective, rejected or end cuttings were not the result of any manufacturing activity and were merely segregated portions of steel coils and raw material found unsuitable for manufacture. Where tax had already been paid on the local purchase of such goods, the levy could not be repeated merely because the items were described as defective or rejected. The rule in relation to different commercial commodities arising out of manufacture did not apply to a case where there was no manufacturing transformation and the same taxed goods were only cut or separated and sold. At the same time, since no manufacturing was undertaken in respect of those items, the denial of set-off was correct on the statutory explanation governing manufactured goods.

Conclusion: The goods which had already suffered tax at the local purchase stage could not be taxed again when sold as defective, rejected or end cuttings, and the matter was remitted for exclusion of such local purchases from the tax computation. The denial of set-off was sustained to the extent that no manufacturing process was involved.

---