Judgment

HANSARIA, J. : Leave granted.

Law has some bright patches as well as some grey areas. Some areas remain grey despite best efforts to illuminate them by enlightened judgments, as they get engulfed in darkness or become part of twilight zone either because of typical climatic condition or changes in conceptual firmament.

2. In the present cases, we are concerned with one of the grey areas of the legal world. The same is as to when a new commercial commodity comes into existence following processing or manufacturing undergone by the parent object, which in most cases serves as a raw material for the end product. This aspect of the matter assumes importance when a law taxes sale of goods. To find out whether a particular goods is exigible to sale tax or not despite the raw material used in the production having been taxed earlier, the test evolved is whether a new commercial commodity has come into existence.

3. As to when it can be said as aforesaid has been a subject matter of catena of decisions. We do not propose either to catalogue them or even (sic) them to find out as to why in one case it was felt that a new commercial commodity had not come into existence and in another a different view was taken. It would be enough if we note some of the leading decisions. These are : (1) Tungabhadra Industries Limited v. Commercial Tax Officer, 11 STC 827 wherein hydrogenated groundnut oil (commonly called Vanaspati) was not held to be a different product from groundnut oil. (2) Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh (1982) 1 SCR 129, where rolled products and extrusions were regarded as different commercial commodity from aluminium ingots and billets, (3) Dy. Commr. of Sales Tax v. Pio Food Packers, 46 STC 63, where pineapples slices sold in sealed cans after processing the pineapples were not regarded as different goods, (4) Alladi Venkateswarlu v. Govt. of Andhra Pradesh, 41 STC 394. where parched rice (Atukulu) and pulled rice (Muramaralu) were held not different from rice, (5) Ganesh Trading Co. v. State of Haryana, 32 STC 623; and Babu Ram Jagdish Chemical Co. v. State of Punjab, 44 STC 159 in both of which rice was accepted as a different commodity from paddy, (6) State of Karnataka v. Raghuram Shetty, 47 STC 369 in which certain observations were made regarding bread being different from wheat flour inasmuch as flour is consumed in the production of bread and so a new commodity comes into existence.

4. When the Gauhati High Court was confronted with a similar situation in Modern Candle Works v. Commr. of Taxes, Assam (1988) 71 STC 362, to which decision one of us (Hansaria, J.) was a party, it had to labour hard to find out as to whether any principle as such can be culled out from large number of decisions noted in that case. Saikia, C. J. as he then was, stated for the Bench that different considerations would apply when the court is concerned with edible articles in contrast to non-edible articles. As to what test should be applied in both these types of articles were then stated as below in paragraph 18:-

"From the above decisions involving edible articles some of the criteria found are whether the entry article is a genus of which the test article is a species; whether the essential characteristics of the entry article are still to be found in the new article; whether there has been addition of external agents thereby making it different; and whether there has been a process of transformation of such a nature and extent as to have resulted in the production of a new article as commonly understood in the market where it is dealt with. So long it does not result in a new article, the nature, duration and transformation of the original commodity would not be material.

In the other line of decisions involving articles which are not as such edible, we find that it is the concept of the consumption of the original commodity in the course of production of a new commodity as understood commonly by the peop