Manufacture by grinding spices creates taxable masala powder as a distinct commercial product.

Grinding and mixing spices already taxed at first sale produced a distinct commercial commodity, as the individual identity of the original ingredients was lost in the process. The court treated the conversion into masala powder as manufacture, not a mere continuation of the taxed spices, and held that the resultant product was exigible to sales tax as an unspecified general commodity. On that basis, the assessment challenge failed.

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Issues: Whether masala powder prepared by grinding and mixing spices already subjected to tax under the Andhra Pradesh General Sales Tax Act, 1957 retained the identity of the original spices or amounted to a new manufactured product liable to sales tax.

Analysis: The ingredients used for preparing masala powder had already suffered tax at the first sale under Entry 182 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957. The question was whether, after mixing and grinding several spices, the original goods continued to exist in the same form or whether the process resulted in a distinct commercial product. The Court held that by combining and grinding the spices, their individual identity was lost and a new product, namely masala powder, emerged. The product could not be treated as a mere continuation of the taxed ingredients. The Court also followed the view that such processing amounts to manufacture and that the resultant product is taxable as an unspecified general commodity.

Conclusion: Masala powder is a new manufactured product and is exigible to sales tax; the challenge to the assessments fails.

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