Processing of spices is not manufacture unless it creates a commercially distinct commodity with a separate identity.

Grinding sabut masala into ground masala was held not to amount to manufacture under section 2(e-1) of the U.P. Sales Tax Act, 1948, because the process did not bring into existence a new commercially distinct commodity with a separate name, character, or use. Mere processing or finishing is insufficient unless the result is a transformed article having a different commercial identity. The taxing notification covered spices and condiments generally and did not treat whole and ground masala as separate taxable goods. On that basis, the revisions were not maintainable on the manufacture issue.

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Issues: Whether grinding of sabut masala into ground masala amounts to manufacture under section 2(e-1) of the U.P. Sales Tax Act, 1948, so as to make the resultant goods separately taxable.

Analysis: The definition of manufacture under section 2(e-1) is wide, but it applies only when a new and commercially different commodity comes into existence. Mere change, processing, or finishing does not amount to manufacture unless the activity brings about transformation into an article having a distinct name, character, or use. The taxing notification relied upon enumerated spices and condiments generally and did not distinguish between whole and ground masala. On the facts, grinding did not create a new commercial commodity; the third Member's finding to that effect was accepted, and the reasoning was reinforced by the principles stated in the cited sales tax decisions.

Conclusion: Grinding of sabut masala does not amount to manufacture, and the revisions were not maintainable on that ground.

Ratio Decidendi: Where processing does not bring into existence a commercially distinct commodity with a separate identity, it is not manufacture for sales tax purposes.

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