Manufacture of crushed stone into bajri or gitti creates a distinct taxable commodity; exemption must be strictly proved.

Crushing stone boulders into bajri or gitti is treated as manufacture because the process creates a commercially distinct commodity with a different name, character, use and market identity; the crushed product is therefore separately taxable. The article also states that exemption from registration and levy cannot be claimed merely on the basis of royalty payment or prior taxation unless the statutory conditions and prescribed proof are established before the assessing authority. Prior payment does not by itself displace the registration and assessment requirements.

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Issues: (i) Whether crushing stone boulders into bajri or gitti amounts to manufacture so as to create a distinct taxable commercial commodity. (ii) Whether the petitioner could avoid registration and levy under the Act on the plea that tax had already been paid at the stage of royalty or first sale.

Issue (i): Whether crushing stone boulders into bajri or gitti amounts to manufacture so as to create a distinct taxable commercial commodity.

Analysis: The statutory scheme treated the first sale of manufactured goods as the relevant stage of levy. The Court applied the settled test that a process is manufacture if it brings into existence a different commercial commodity having a distinct name, character and use. Stone boulders and the crushed product bajri or gitti were held to differ in commercial identity, utility and market recognition. The fact that the resultant goods retained the basic attributes of stone did not prevent the process from being manufacture, because the end product was fit for a different use and was understood in trade as a separate commodity.

Conclusion: Crushing stone boulders into bajri or gitti amounts to manufacture and the resultant goods are separately taxable.

Issue (ii): Whether the petitioner could avoid registration and levy under the Act on the plea that tax had already been paid at the stage of royalty or first sale.

Analysis: The exemption and first-stage levy provisions were available only where the factual foundation required by the statute and rules was established before the assessing authority. The petitioner failed to produce the prescribed material showing payment of tax in the manner required under the Act and Rules. The plea that royalty payment or prior taxation automatically exempted the petitioner from registration and assessment was therefore not accepted.

Conclusion: The petitioner was not entitled to exemption from registration or from the levy on this ground.

Final Conclusion: The writ petition failed because the crushed product was a manufactured commodity liable to sales tax, and the claim of prior payment or exemption was not proved in the manner required by law.

Ratio Decidendi: Where a process changes stone boulders into a commercially distinct product with a different name, use and market identity, it constitutes manufacture for sales tax purposes, and exemption from levy must be strictly established in the manner prescribed by the statute and rules.

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