Judgment :- Chitra Venkataraman, J. 1. This Tax Case (Revision), filed by the assessee as against the order of the Tamil Nadu Sales Tax Appellate Tribunal relating to the assessment year 1993-94, was admitted by this Court on the following substantial questions of law: "1. On the facts and in the circumstances of the case, when fresh milk was converted into processed milk such as toned milk, standardized milk, skimmed milk and pasturised milk, is the Tribunal right in holding that there is no manufacture involved therein? 2. Whether the mere use of the generic term of 'milk' will result in 'no manufacture', and the milk purchased and the processed milk sold will result in the same commodity being sold? And 3. Whether on the facts and circumstances of the case and having regard to the fact that no guilty mind can be attributed to the petitioner, penalty under Sec.23 of the TNGST Act, 1959, for an alleged offence under Sec.45(2)(e) of the said Act will stand attracted?" 2. The assessee herein is a Co-operative Milk Producers Federation. The assessee purchased polythene films for being used in packing milk and milk products. In respect of purchase of polythene films, the assessee claimed concessional rate of tax under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. The assessee submitted that the milk sold by the assessee was pasteurised milk, which had undergone manufacturing process, hence, being a different commodity, the assessee was eligible to use Form XVII declaration for purchase of the packing material. The Assessing Authority, however, rejected the said contention on the ground that there was no manufacturing operation and when the fresh milk was pasteurised to be sold as a pasteurised milk and further, milk was not taxable, the assessee was not eligible to use Form XVII declaration. In the light of the same, while rejecting the concessional levy, the Assessing Officer levied penalty for misuse of the declaration form. 3. Aggrieved by this, the assessee went on appeal before the Appellate Assistant Commissioner, who agreed with the Assessing Officer and viewed that polythene films purchased were not actually packing materials as such and Section 3(3) contemplated packing materials directly used for packing manufactured item. As it had undergone a process as a sachet, Section 3(3) was not available. Consequently, the assessee was not entitled to the concessional levy. 4. As it had undergone a process as a sachet, Section 3(3) was not available. Consequently, the assessee was not entitled to the concessional levy. 4. Thus, on this gruond, the claim was rejected. Aggrieved by this, the assessee went on further appeal before the Tamil Nadu Sales Tax Appellate Tribunal, which confirmed the view of the Authorities below. 5. The Tribunal pointed out that milk marketed by the assessee did not undergo any processing to result in a different commodity, thus pasteurised milk retained its characteristics as milk; consequently, there was no manufacturing activity involved to result in a different commodity. It further pointed out that re-constituted or re-combined milk and fresh milk were included under Entry 6 to part B of the third Schedule to the Act, the concessional levy under Section 3(3) would be available only in respect of goods attracting levy under First Schedule to the Act. Thus, as milk sold by the assessee was assessable under Third Schedule, concessional levy was not available. As regards the levy of penalty, the Tribunal reduced the same to 50% of the tax payable as against 150% adopted by the Assessing Officer. Thus, except for reduction in penalty, the assessment was confirmed. Aggrieved by this, the assessee has filed this present Tax Case (Revision). 6. Learned counsel appearing for the assessee submitted that milk as an item of pasteurisation was brought under the Third Schedule with effect from 1.4.1994 only. The entry therein reads as fresh milk and directly reconstituted milk (without additives other than water). During the relevant assessment year 1993-94, milk was taxable under the First Schedule and it was a subject matter of exemption under Notification No.II(1)/CTRE/69/81 dated 3rd January, 1981. The said Notification reads as under: "No.II(1)/CTRE/580/81 – In exercise of the powers conferred by sub-section (3) of Section 17 of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959), the Governor of Tamil Nadu hereby makes the following amendment to the Commercial Taxes and Religious Endowment Department Notification No.II(1)/CTRE/69/81 dated the 3rd January 1981, published at page 10 of Part II Section 1 of the Tamil Nadu Government Gazette dated the 11th February 1981. AMENDMENT : In the said notification, for the words "and milk" the following words shall be substituted, namely:- "Fresh milk, recombined milk and milk drink with or without any addition thereto for being sold as a beverage". 7. Going by the fact that apart from fresh milk, recombined milk and milk drink with or without addition also qualified for exemption, it stands to reason that the statute treated fresh milk and recombined milk as two separate entities. Thus, the notification contemplated exemption on fresh milk as well as recombined milk and milk drink with or without addition, sold as beverage, treating them as different marketable goods. Thus, it is evident that the notification recognises the process involved in making fresh milk into recombined milk. Learned counsel further pointed out that even though the Act does not define the term 'manufacture', yet, Rule 3 (h) of the Tamil Nadu General Sales Tax Rules, 1959 gives the clue. It defines 'manufacturer' to mean "any person who produces, prepares or makes goods for the purpose of trade". Extending this definition to the understanding of 'manufacture' as referred to in sub-section (3), it is evident that when the assessee processed fresh milk into pasteurised milk or recombined milk, there is a manufacturing process involved; consequently, the Tribunal committed serious error in holding that there was no manufacturing process. Thus learned counsel pointed out that contrary to the understanding of the Tribunal, milk was very much under the First Schedule good during the relevant assessment year, viz., 1993-94 and only from 199495, it was brought under Third Schedule. Being First Schedule good, Section 3(3) was very much applicable to the facts of the case. 8. As far as the packing material is concerned, the Act contemplates use of packing material in connection with the manufacture and sale of goods mentioned in the First Schedule. Once the first question thus stood answered in favour of the assessee, Form XVII declaration used for the purchase of packing material also qualified for concessional rate of tax. 9. Learned Special Government Pleader appearing for the Revenue, however, disputed the said claim of the assessee and submitted that there was no manufacturing activity involved in converting the fresh milk into recombined milk or a pasteurised milk. In the circumstances, the assessee is not entitled to concessional levy in respect of purchase of polythene films. 10. 9. Learned Special Government Pleader appearing for the Revenue, however, disputed the said claim of the assessee and submitted that there was no manufacturing activity involved in converting the fresh milk into recombined milk or a pasteurised milk. In the circumstances, the assessee is not entitled to concessional levy in respect of purchase of polythene films. 10. In this connection, he placed reliance on the decisions reported in (2009) 20 VST 276 (Allahaba Dugdh Utpadak Sahkari Sangh Limited V. Commissioner, Trade Tax, U.P.Lucknow), (1983) 52 STC 117 (Commissioner of Sales Tax V. Agarwal & Co.) and (2001) 124 STC 395 (State of Andhra Pradesh V. Indian Dairy Corporation). He also pointed out to the specific notification available with reference to the Co-operative Societies that all sales of milk by Co-operative Milk Society and Unions, except sale to the actual consumers, are exempted under the Act. In the light of the provisions thus available, one can conclude that there was no manufacture of pasteurised or recombined milk out of fresh milk qualified for concessional levy under sub-section (3). Hence, there being no manufacturing activity involved, the Tribunal correctly held that the assessee was not entitled to concessional levy. 11. Heard learned counsel appearing for the petitioner and the learned Special Government Pleader appearing for the respondent and perused the materials placed before this Court. 12. As far as the issue as to whether milk is a subject matter of taxation under the First Schedule or under the Third Schedule, we agree with the submission made by the learned counsel appearing for the assessee that during the relevant assessment year, namely, 1993-94, milk was very much a subject matter of taxation under the First Schedule and the Third Schedule is relevant only in the next assessment year. Therefore, the order of the Tribunal to that extent is incorrect. 13. Therefore, the order of the Tribunal to that extent is incorrect. 13. Under Notification II(1)/CTRE/69/81 dated the 3rd January 1981, in exercise of powers under Section 17 of the Tamil Nadu General Sales Tax Act, the Government passed a Notification on sale of milk as under : "No.II(1)/CTRE/580/81 – In exercise of the powers conferred by sub-section (3) of Section 17 of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959), the Governor of Tamil Nadu hereby makes the following amendment to the Commercial Taxes and Religious Endowment Department Notification No.II(1)/CTRE/69/81 dated the 3rd January 1981, published at page 10 of Part II Section 1 of the Tamil Nadu Government Gazette dated the 11th February 1981. AMENDMENT : In the said notification, for the words "and milk" the following words shall be substituted, namely:- "Fresh milk, recombined milk and milk drink with or without any addition thereto for being sold as a beverage". 14. Going by the enumeration in the exemption notification, it is clear that the State intended to treat fresh milk as different from recombined milk and milk drink with or without addition, to be sold as a beverage. If the Statute intended fresh milk and other enumerated item as one and the same, then there would be no need for enumeration of recombined milk and milk drink with or without addition thereto for being sold as beverage. Thus, when the exemption notification contemplated fresh milk as well as recombined milk as subject matter of exemption, it stands to reason that the State had fully understood the difference between the fresh milk and recombined milk and the process involved in bringing out a commercially different product, namely, recombined milk. 15. In the decision reported in (2009) 20 VST 276 (Allahaba Dugdh Utpadak Sahkari Sangh Limited V. Commissioner, Trade Tax, U.P.Lucknow), the Allahabad High Court pointed out the different types of milk as different commercial commodity on the strength of the notification granting exemption to milk. The High Court held that artificial milk, re-constituted milk or recombined milk prepared by mixing milk powder, butter and butter oil etc. would also qualify for exemption under the notification falling within the meaning 'milk'. The High Court held that artificial milk, re-constituted milk or recombined milk prepared by mixing milk powder, butter and butter oil etc. would also qualify for exemption under the notification falling within the meaning 'milk'. The other two decisions reported in (1983) 52 STC 117 (Commissioner of Sales Tax V. Agarwal & Co.) and (2001) 124 STC 395 (State of Andhra Pradesh V. Indian Dairy Corporation) are with reference to the issue as to whether skimmed milk powder would fall within the meaning of 'milk'. 16. As far as the notification before us is concerned, the exemption itemises the subject matter of exemption. Going by the enumeration, there could be no doubt that they are commercially different commodities. The question, hence is, as to whether there is any manufacturing process in making the fresh milk as pasteurised milk. Admittedly, there is no definition what 'manufacture' is. However, Rule 3(h) of the Tamil Nadu General Sales Tax Rules gives the clue to the understanding of what 'manufacturer' is. It defines, 'manufacturer' means "any person who produces, prepares or makes goods for the purpose of trade" Going by such wide definition given to the word 'manufacturer', a preparation or process of making goods for the purpose of trade would also become manufacture for the purpose of Section 3(3). As had been held by the Apex Court in a number of decisions, in the absence of any definition to the word 'manufacture' restricting its meaning, the word 'manufacture has to be given a meaning as is understood in the common parlance. 17. In the decision reported in (2002) 125 STC 101 (Aspinwall and Co. Ltd., V. Commissioner of Income Tax), the Supreme Court pointed out that 'manufacture' has to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. If the change made in the article results in a new and different article, then it would amount to manufacturing activity. 18. Thus, in the context of the definition to the word 'manufacturer' under Rule 3(h) of the Tamil Nadu General Sales Tax Rules, 1959, guided by the decision of the Apex Court reported in (2002) 125 STC 101 (Aspinwall and Co. 18. Thus, in the context of the definition to the word 'manufacturer' under Rule 3(h) of the Tamil Nadu General Sales Tax Rules, 1959, guided by the decision of the Apex Court reported in (2002) 125 STC 101 (Aspinwall and Co. Ltd., V. Commissioner of Income Tax), we have no hesitation in accepting the contention of the assessee that when fresh milk is made as recombined milk or pasteurised milk, there being manufacture, the assessee is entitled to the benefit of Section 3(3). 19. In the light of the above, we have no hesitation in holding that the Tribunal committed an error in holding that there was no manufacturing activity involved when fresh milk was converted as recombined milk/pasteurised milk. 20. Section 3(3) grants concessional levy on the sale of packing materials. Thus going by the above, we agree with the assessee that the benefit of concessional levy is available in respect of purchase of polythene sheets to be used as packing material for sale of pasteurised milk. Accordingly, the order of the Tribunal stands set aside including the levy of penalty and the Tax Case (Revision) stands allowed. No costs. Consequently, TCMP No.1601 of 2006 stands closed.