Conversion of coal breeze into hard coke qualifies as manufacture where processing creates a commercially distinct commodity.

The conversion of coal breeze into hard coke is treated as manufacture under section 2(e1) of the U.P. Trade Tax Act, 1948 because the definition of manufacture extends to processing, treating or adapting goods. Burning coal breeze at a specific temperature to remove impurities produces a commercially distinct commodity with a different character, use and market identity. The process is therefore not a mere sale of the same commodity, and turnover from hard coke is taxable in the hands of the dealer as a manufacturer. The earlier view on coal and hard coke for rate purposes does not govern whether the activity itself amounts to manufacture.

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Issues: Whether conversion of coal breeze into hard coke amounts to manufacture under section 2(e1) of the U.P. Trade Tax Act, 1948, and consequently whether the turnover of hard coke is liable to tax in the hands of the dealer as manufacturer.

Analysis: The definition of manufacture under section 2(e1) is wide and includes processing, treating or adapting goods. The process in question involved burning coal breeze at a specific temperature to remove impurities and produce hard coke. The resulting product was commercially known as a distinct and highly combustible commodity with a different use and character. Applying the settled principle that manufacture may exist where processing brings about a commercial transformation, the conversion of coal into hard coke could not be treated as the mere sale of the same commodity. The earlier view that coal and hard coke are the same for rate purposes did not determine whether the activity itself amounted to manufacture.

Conclusion: The conversion of coal into hard coke amounts to manufacture under section 2(e1) of the U.P. Trade Tax Act, 1948, and the dealer is liable to tax on the sale of hard coke as a manufacturer.

Ratio Decidendi: Under the U.P. Trade Tax Act, a process that transforms coal into a commercially distinct product such as hard coke constitutes manufacture because the statutory definition extends to processing, treating or adapting goods.

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