Purified bottled water is not manufacture for sales tax exemption where no commercially distinct product emerges.

Filtration, chlorination, sterilisation, ozonation and bottling of water did not amount to manufacture under the sales tax exemption notification because the process only produced purified drinking water and not a commercially distinct product. The Court noted that the item remained water, did not meet the standards of mineral water, and the change in description from mineral water to drinking water did not alter that position. As the exemption claim failed on merits, withdrawal of the exemption certificate was upheld despite the absence of prior notice, and the bottles themselves did not give rise to a separate exemption basis.

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Issues: (i) Whether the processes of filtration, chlorination, sterilisation, ozonation and bottling of water amounted to "manufacture" within Notification S.R.O. No. 1729/93 so as to qualify the petitioners' product for sales tax exemption. (ii) Whether withdrawal of the exemption certificate without prior notice was invalid in the circumstances.

Issue (i): Whether the processes of filtration, chlorination, sterilisation, ozonation and bottling of water amounted to "manufacture" within Notification S.R.O. No. 1729/93 so as to qualify the petitioners' product for sales tax exemption.

Analysis: The notification treated manufacture as the use of raw materials resulting in commercially different goods and specifically excluded mere packing, cleaning, blending and similar processes. The water sold by the petitioners was found to be only purified and sterilised water made fit for human consumption, not a commercially distinct product. The Court also noted that the product did not satisfy the standards of "mineral water" under the Prevention of Food Adulteration Rules, 1955, and that the change of description from "mineral water" to "drinking water" reinforced that the item remained water and had not undergone a manufacturing transformation.

Conclusion: The petitioners' activity did not amount to manufacture, and they were not entitled to sales tax exemption.

Issue (ii): Whether withdrawal of the exemption certificate without prior notice was invalid in the circumstances.

Analysis: Although notice ought ordinarily to have been issued before withdrawing an adverse exemption certificate, the petitioners' own stand showed that the earlier description of the product as mineral water was incorrect. Since the underlying claim to exemption failed on merits, the absence of prior notice did not affect the validity of the withdrawal. The claim based on bottles also had no independent basis because the exemption was sought for the product sold in the containers, not for separately manufactured bottles.

Conclusion: The withdrawal of exemption was upheld notwithstanding the absence of prior notice.

Final Conclusion: The petitioners failed to establish a right to sales tax exemption on the bottled water product, and the challenge to withdrawal of the exemption certificate also failed.

Ratio Decidendi: A process that merely purifies, sterilises and bottles water without producing a commercially distinct product does not amount to manufacture for purposes of sales tax exemption under the notification, and a procedural lapse in notice will not invalidate withdrawal where the exemption claim is untenable on merits.

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