Delegated taxing notification cannot create a second tax point, and crushing stone into grit is not manufacture.

A delegated taxing notification cannot create a second taxable point for the same goods unless the parent provision expressly authorises that condition; a notification that shifted the tax point for stone crushers and provided refund or adjustment was therefore beyond section 3-A(1)(b) and invalid. Crushing stone boulders into stone gitti or stone grit also does not amount to manufacture, because the process does not produce a new commercial commodity; the goods remain stone in another form and are treated as the same for tax purposes. On that basis, tax collected under the impugned condition was held liable to be returned.

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Issues: (i) Whether the condition in the notification dated 16 February 2004, issued under section 3-A(1)(b) of the U.P. Trade Tax Act, 1948, could validly impose a different point of sale for stone crushers and provide for refund or adjustment of tax. (ii) Whether crushing stone boulders into stone gitti/stone grit amounts to manufacture or creates a different commercial commodity for the purposes of taxation under the Act.

Issue (i): Whether the condition in the notification dated 16 February 2004, issued under section 3-A(1)(b) of the U.P. Trade Tax Act, 1948, could validly impose a different point of sale for stone crushers and provide for refund or adjustment of tax.

Analysis: Section 3-A(1)(b) authorises the State Government to declare the point and rate of tax by notification and permits different points and different rates for different goods. The enabling provision does not confer power to attach a further condition creating two different points of sale for the same goods. A subordinate notification must remain within the limits of the parent provision and cannot travel beyond the delegated power. The impugned condition, by shifting the taxable point to the sale by the stone crusher while also providing refund or adjustment to the earlier seller, went beyond the scope of the section. The scheme of the Act also showed that where conditions were intended, the statute said so expressly in other provisions.

Conclusion: The condition in the notification was ultra vires section 3-A(1)(b) and was invalid.

Issue (ii): Whether crushing stone boulders into stone gitti/stone grit amounts to manufacture or creates a different commercial commodity for the purposes of taxation under the Act.

Analysis: The definition of manufacture under section 2(e-1) covers processing or adapting goods, but every change in size or form does not amount to manufacture unless a new commercial commodity emerges. Crushing stone boulders into stone grit or gitti does not produce a new commodity; the substance remains stone in a different form. The Court relied on the settled principle that stone boulders, chips, gitti and ballast are commercially of the same nature and that the process of crushing does not constitute manufacture.

Conclusion: Crushing the stone boulders did not amount to manufacture and the resulting gitti/stone grit remained the same goods for tax purposes.

Final Conclusion: The impugned condition imposing a second taxable point for the same goods could not be sustained, and the tax collected under that condition was liable to be returned to the petitioners.

Ratio Decidendi: A delegated taxing notification cannot create a new taxable point for the same goods unless the enabling provision expressly authorises such a condition, and mere crushing of stone boulders into smaller forms does not amount to manufacture or produce a new commercial commodity.

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