Tinting paint base material amounted to manufacture, and the finished coloured paint was separately taxable.

Tinting, mixing or staining white paint base material in an automatic machine was treated as manufacture because the material was only a semi-finished base requiring further processing to become a marketable paint product. The packing and product description showed that colourant had to be added before sale, so the process brought the commodity to its final commercial form. The coloured paint was also held to be a different taxable commercial commodity from the untinted base material, with a distinct market identity. Accordingly, prior tax payment on the base material did not exempt the finished coloured paint, and the turnover was liable to tax.

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Issues: (i) Whether the process of tinting, mixing or staining white paint base material in an automatic machine amounts to manufacture under the sales tax law. (ii) Whether the goods sold after tinting remained the same paint on which tax had already been paid, or became a different taxable commercial commodity.

Issue (i): Whether the process of tinting, mixing or staining white paint base material in an automatic machine amounts to manufacture under the sales tax law.

Analysis: The decisive question was whether the material subjected to tinting was already a finished paint or merely a base material requiring further processing to become paint. The packing itself stated that it was not to be sold without tinting, that it was base material for paints, and that the final product would emerge after addition of colourant. On that basis, the material was treated as semi-manufactured and not as a complete paint product. Applying the statutory definition of manufacture, the process of adding colourant in an automatic machine was held to be a form of processing that brought the commodity to its marketable final form.

Conclusion: The process amounted to manufacture.

Issue (ii): Whether the goods sold after tinting remained the same paint on which tax had already been paid, or became a different taxable commercial commodity.

Analysis: The base material was found not to possess all the characteristics of paint in its original form. After tinting, it acquired the characteristics and commercial identity of coloured paint, which was treated as a distinct market commodity from the base material. Since the finished product was not the same commodity as the untinted base material, the earlier tax payment on the base material did not exempt the coloured paint from taxation. The notification relied upon did not assist the assessee because the final product was not held to be the same untaxed or already taxed paint in unchanged form.

Conclusion: The coloured paint was a different taxable commercial commodity and was liable to tax.

Final Conclusion: The revision failed because the authorities' finding that tinting converted base material into a new commercial product was upheld, and no error was found in the treatment of the turnover as taxable.

Ratio Decidendi: Where a commodity is only a base material and further processing is necessary to convert it into a marketable product with a distinct commercial identity, the process constitutes manufacture and the resulting product is separately taxable as a different commercial commodity.

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