( 1. ) IN this writ petition, the petitioner is challenging the order of the Divisional Deputy Commissioner of Sales Tax, Jabalpur, in revision, affirming the order of assessment of the Sales Tax Officer, Jabalpur, disallowing the claim of the petitioner for deduction of tax, subject to goods under Section 2 (r) (ii) of the Madhya Pradesh General Sales Tax Act, 1958, and under notification dated October 11, 1977, under the Central Sales Tax Act, 1956.

( 2. ) THE petitioner is a registered firm, carrying on the business of purchase of dolomite from registered dealers and it is also registered as a dealer under both the Acts. The petitioner purchases dolomite in the form of lumps from registered dealers on payment of tax at full rate within the State. The lumps are then crushed and the chips and powder, which are obtained, are sold to various glass manufacturers within and outside the State. The petitioners follow the calendar year. The relevant period of assessment is May 23, 1981 to December 31, 1981. In the quarterly returns submitted by it under the State Act and the Central Act, the petitioner claimed that sales were of tax-paid goods and no tax was, therefore, payable under Section 2 (r) (ii) of the State Act and under notification No. 3326-3081/v-ST, dated October 11, 1977, under the Central Act and placed reliance on two decisions of the Allahabad High Court. According to the petitioner, by crushing lumps into chips and powder, there was no manufacture inasmuch as no different commercial commodity came into being. What was sold was also dolomite in the form of chips and powder, instead of lumps. However, the Sales Tax Officer rejected the claim of the petitioner and held that a different commodity is obtained by crushing dolomite lumps into chips and powder. Since there was a manufacture within the meaning of Section 2 (j) of the State Act, he disallowed the claim of deduction on account of sale of tax-paid goods under Section 2 (r) (ii) of the Act. He assessed sales at Rs. 23,000 as taxable at 10 per cent and levied tax of Rs. 12,300 under the State Act and held sales of Rs. 3,62,000 in the course of inter-State trade or commerce, which were taxed at 4 per cent supported by C forms and a tax of Rs. 14,480 was levied, by disallowing the exemption claimed under the notification. The petitioner preferred a revision before the Divisional Deputy Commissioner of Sales Tax against both the orders of assessment and by a common order, the revision was dismissed. According to the Divisional Deputy Commissioner, the definition of "manufacture" in Section 2 (j) of the State Act is very wide and includes any process or manner of producing, collecting, extracting, preparing or making any goods. Crushing lumps will be within the activity of manufacture. Dolomite in the form of lumps cannot be said to be the same thing as in the form of chips and powder. The commercial utility of both is different. There cannot be exchange for lumps with chips or powder, they being different commercial commodities. The petitioner, by breaking lumps into chips and powder, manufactures new commercial commodity. Therefore, he did not accept that the petitioner sold tax-paid goods.

( 3. ) ACCORDING to the petitioner, chips and powder are obtained by breaking lumps only for the purpose of convenience for their use and the chips and powder retain the same characteristics and qualities as dolomite lumps. Except for change in shape, there is absolutely no transformation, so as to bring a new commercial commodity with different characteristics and qualities. In commercial world, dolomite, whether in lumps or as chips or powder, is dolomite. Therefore, the sales tax authorities were in error in law in holding that dolomite chips and powder were different marketable commodities from dolomite lumps and thereby disallowing the claim of deduction under Section 2 (r) (ii) of the State Act and the notification in question referred to earlier under the Central