Integrated manufacturing process using power at any material stage qualifies as manufacture under the Bihar Sales Tax Rules.

Where timber was sawn with power and then converted into furniture without power at the later stage, the activity remained a single integrated manufacturing process. Rule 2(9) of the Bihar Sales Tax Rules, 1983 excludes only manufacture carried on without power; use of electricity at any material stage was sufficient to bring the process within the definition of manufacture. The Patna HC therefore held that the assessee was a manufacturer under the rule and answered the reference against the assessee.

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Issues: Whether a person who sawn timber logs with power and thereafter manufactured furniture from the timber without using power in the later stage could be treated as a manufacturer under rule 2(9) of the Bihar Sales Tax Rules, 1983.

Analysis: The taxable activity consisted of an integrated manufacturing process beginning with sawing timber logs by use of electricity and ending with the production of furniture. Rule 2(9) excludes only a manufacture or manufacturing process which does not use power. Where the process is composite and power is used at one stage of the manufacture, the later absence of power at another stage does not take the activity outside the definition. Manufacturing of furniture may involve several steps, and if those steps form one integrated process, the use of power in an essential stage is sufficient to attract the rule.

Conclusion: The petitioner was a manufacturer within the meaning of rule 2(9) of the Bihar Sales Tax Rules, 1983, and the reference was answered against the petitioner.

Ratio Decidendi: Where manufacture is carried on through one integrated process and power is used in any material stage of that process, the activity is not excluded from the definition of manufacture under rule 2(9) of the Bihar Sales Tax Rules, 1983.

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