Manufacture test in sales tax law: processing gypsum into powder and plaster of paris qualifies for concessional treatment.

Converting natural gypsum into gypsum powder and plaster of paris by dehydration and grinding at the quarry site amounts to manufacture where the process produces commodities with a distinct identity, character and functional utility in commercial parlance. Applying the settled sales tax test, the court treated the change from natural gypsum to the processed products as the emergence of separate goods, not merely a change in form. On that basis, the dealer's activity was held to constitute manufacture and the concessional tax treatment under section 5-C of the Rajasthan Sales Tax Act, 1954 was .

---

---

Issues: Whether converting gypsum into gypsum powder and plaster of paris by dehydration and grinding at the quarry site amounts to manufacture so as to entitle the dealer to concessional tax under section 5-C of the Rajasthan Sales Tax Act, 1954.

Analysis: Gypsum in its natural form and the products obtained after partial or complete dehydration were held to be different commodities with distinct character and functional utility. The court applied the settled sales tax principle that when, by a process applied manually or mechanically, a commodity with a distinct identity and different functional utility emerges and is known separately in commercial parlance, the process constitutes manufacture.

Conclusion: The process adopted by the dealer amounted to manufacture, and the assessee was entitled to the concessional treatment claimed.

---