Manufacture for sales tax exemption requires a new commercial commodity; crushing boulders did not qualify, and future exemption withdrawal was upheld.

Crushing boulders into smaller stones was held not to amount to manufacture because the process did not produce a distinct new commercial commodity, so the sales tax exemption claim failed on that point. A granted eligibility certificate or exemption could not ordinarily be cancelled on a mere change of opinion, but where the grant was contrary to a binding Supreme Court ruling on the same issue, the Revenue could withdraw the concession for the future. The benefit already enjoyed up to the date of withdrawal was preserved in equity, while future exemption was sustained as unavailable.

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Issues: (i) Whether crushing of boulders into smaller sizes of stones amounts to manufacture for the purpose of sales tax exemption. (ii) Whether an eligibility certificate already granted could be cancelled or the exemption withdrawn on the footing that the activity was not manufacturing.

Issue (i): Whether crushing of boulders into smaller sizes of stones amounts to manufacture for the purpose of sales tax exemption.

Analysis: The controlling test is whether the process results in emergence of a distinct and new commercial commodity. The Court treated the question as covered by the binding decision of the Supreme Court in the identical context, where crushing of boulders into smaller stones was held not to amount to manufacture because no new commercial commodity comes into existence. Earlier or different factual decisions dealing with other processes could not displace that direct authority.

Conclusion: The activity does not amount to manufacture and the issue is decided against the assessee.

Issue (ii): Whether an eligibility certificate already granted could be cancelled or the exemption withdrawn on the footing that the activity was not manufacturing.

Analysis: A granted benefit cannot ordinarily be withdrawn on a mere change of opinion on a debatable issue in the absence of fraud or misrepresentation. Here, however, the certificate had been granted after the binding Supreme Court ruling on the same question. The Revenue was acting on settled law, and there could be no estoppel against law. On those facts, cancellation for the future was permissible, though the benefit already enjoyed was protected in equity.

Conclusion: Withdrawal of the benefit for the future was upheld and the issue is decided in favour of Revenue.

Final Conclusion: The writ petitions were not interfered with on the merits of the proposed cancellation, but the benefit already extended up to the date of the order was preserved and only future withdrawal was sustained.

Ratio Decidendi: Where a process does not produce a new commercial commodity, it is not manufacture, and a tax concession granted contrary to a binding precedent may be withdrawn for the future even if the assessee had earlier acted on the grant.

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