Manufacture through leather processing secures concessional tax treatment and avoids higher tax on processing inputs.

Processing wet blue leather through successive stages into finished leather was treated as manufacture because the activity produced a commercially different commodity. On that basis, the concessional tax treatment under Section 3 of the Tamil Nadu General Sales Tax Act, 1959 applied, and the purchase of chemicals used in the processing did not attract the higher rate of tax. The Tribunal's view was upheld, and the Revenue's challenge failed.

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Issues: Whether the conversion of wet blue leather into finished leather amounts to manufacture under Section 3 of the Tamil Nadu General Sales Tax Act, 1959 and whether the assessee was therefore entitled to the concessional rate of tax without liability to higher tax on purchases.

Analysis: The dispute was governed by the earlier decision of the Court which held that the processing of wet blue leather through multiple stages results in a commercially different product, finished leather, and that such transformation constitutes manufacture. On that basis, the benefit under Section 3 was held available and the purchase of chemicals for such processing did not attract the higher rate of tax.

Conclusion: The issue was answered in favour of the assessee. The Tribunal's view was upheld and the Revenue's challenge failed.

Final Conclusion: The tax case was dismissed by following the binding earlier decision on manufacture and concessional taxation in respect of wet blue leather processed into finished leather.

Ratio Decidendi: Where processing changes the identity of the goods into a commercially distinct commodity, the activity amounts to manufacture for the purpose of concessional taxation under the Act.

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