Manufacture and taxability of smokeless coke: processed steam coal becomes a distinct commodity and is separately taxable.

Processing steam coal in a mechanized plant into smokeless coke was treated as manufacture because the process produced a commercially distinct and marketable product with a separate identity and use. The Court applied the common-parlance and marketability test, holding that the original coal lost its identity after heating, burning, and quenching and became a different commodity understood as smokeless soft fuel. It further held that the taxing scheme did not exclude levy on the manufactured product. Smokeless coke made from steam coal in a mechanized plant was therefore liable to tax as a separate commodity.

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Issues: Whether smokeless coke obtained from processing steam coal in a mechanized plant is a different commercial commodity from coal and liable to tax under the Madhya Pradesh Commercial Tax Act, 1994, or whether it remains coal so as to be treated as tax-paid sales.

Analysis: The relevant statutory scheme treated coal, including coke in all its forms, as falling within the coal entry, but the Court examined whether the manufacturing process changed the character of the goods. Under the definition of manufacture in Section 2(o) of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994, and the notification excluding only conversion of coal into coke other than in a mechanized plant, the use of a mechanized process was material. The Court relied on the principle that where processing produces a new commercially marketable commodity with a distinct identity and use, the result is manufacture. Applying that principle, and distinguishing authorities dealing with other goods, the Court held that steam coal, after heating, burning and quenching, loses its original identity and becomes smokeless soft fuel, which is understood in common parlance as a different commodity. It also held that the relevant taxing provisions did not prevent levy on the manufactured product.

Conclusion: Smokeless coke manufactured in a mechanized plant from steam coal is a different commodity from coal and is liable to tax under the Madhya Pradesh Commercial Tax Act, 1994.

Ratio Decidendi: Where processing of coal in a mechanized plant produces a commercially distinct and marketable commodity with a different identity and use, the product is manufacture and is taxable as a separate commodity.

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