Processing limestone through crushing, sizing, and screening does

Processing limestone through crushing, sizing, and screening does not alter its identity and isn’t manufacture.

Issue

Whether the mechanical processing of raw limestone and dolomite—specifically through crushing, sizing, screening, and grading—amounts to a “manufacture” under Section 2(72) of the CGST/OGST Act when the underlying chemical composition remains unchanged.

Facts

The Parties: The applicant is a government enterprise that owns a mine in Odisha, and M/s Singhal Enterprises is the contracted works operator.
The Agreement: The parties entered into a works order to process raw limestone and dolomite extracted from the applicant’s mine into finished, marketable products.
The Process: The operational scope involves a series of physical processing steps, including crushing, sizing, screening, and grading the mined minerals.
The Risk Allocation: The underlying contract places the complete commercial and operational risk entirely on Singhal Enterprises until the conforming, processed minerals are successfully delivered.
The Advance Ruling: The applicant approached the Authority for Advance Ruling (AAR) to determine if these specific processing activities legally qualify as “manufacture” under the GST framework.

Decision

No Structural Transformation: The Authority observed that the processing steps do not transform the raw limestone or dolomite into a distinct new article or commercial commodity.
Identity Remains Unaltered: While the physical dimensions and particle sizes of the minerals are modified, their core chemical composition, mineral identity, and commercial nomenclature remain entirely unchanged.
Not Manufacture: The Authority ruled that because no new product with a distinctive character, name, or use emerged, the activity does not amount to “manufacture” under Section 2(72) of the Act.
Ruling: The final decision was delivered in favor of the revenue.

Key Takeaways

Physical Alteration vs. Transformation: Simply altering the size or physical form of a raw mineral through mechanical processes (crushing/screening) does not equal manufacturing if the product’s fundamental identity stays intact.
The New Commodity Test: For an activity to meet the threshold of “manufacture” under Section 2(72) of the GST Act, it must result in a transformation that births a completely new commercial product with a different name, character, or usage.
Risk Allocation Doesn’t Change Classification: The commercial terms of a contract—such as shifting operational risks to a vendor—have no bearing on the objective legal classification of a process under tax laws.

AUTHORITY FOR ADVANCE RULING , ODISHA BENCH

Bisra Stone Lime Company Ltd., In re*

Harsh Vardhan and MS. PRATIMA MOHANTY, Member

09/ODISHA–AAR/2025-26

JANUARY 30, 2026

Akash Kapoor, Adv. for the Applicant.

Proceedings

1. The Applicant is A Government owned mining company and has sought advance ruling in respect of the following question:

Q.1 Whether the activity carried out by M/s. Singhal Enterprises amounts to “manufacture” under Section 2(72) of the CGST Act, 2017.

1.1 At the outset, we would like to make it clear that the provisions of both the CGST Act and the OGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the OGST Act.

2. The applicant furnishes some facts relevant to the stated activity:

•

That the Applicant, a government enterprise, has entered into a works order with M/s Singhal Enterprises for transforming raw limestone / dolomite extracted from its mine in Odisha into finished, marketable products through a series of processing steps: crushing, sizing, screening, and grading. The contract places complete commercial and operational risk on Singhal Enterprises until the delivery of conforming, processed limestone / dolomite. BSLC maintains the right to reject any product not meeting prescribed specifications. Crucially, raw limestone/dolomite has no direct industrial utility until subjected to these processes, substantiating the emergence of a commercially distinct commodity.

•

That the Applicant humbly submits that Section 2(72) of the CGST Act defines “manufacture” as processing input in any manner resulting in emergence of a new product with a distinct name, character, and use. This contractual arrangement between the Applicant & M/s Singhal Enterprises goes beyond mere service provision; it results in a transformation, not simply facilitation.

•

That the arrangement between the Applicant and M/s Singhal Enterprises does not amount to Mine Development Service. Mine development service per GST law refers to activities such as overburden removal, drilling, and excavation, all undertaken pre-extraction. Here, M/s Singhal Enterprises completes the mining in addition to processing and transformation of extracted limestone/dolomite. Also, they are entrusted with overall development and upkeep of the mines.

•

That the Applicant submits that in the case of India Cements Ltd. v. State of Tamil Nadu AIR 1990 SC 85: In this landmark case, the Supreme Court differentiated mining activities from postmining processes. The facts revolved around inclusion of certain activities in the definition of “mining” under the Tamil Nadu General Sales Tax Act, where the Court ruled that only direct extraction forms part of mining, not subsequent processing. Also, in the Circular No. 114/33/2019-GST dt. 11/10/2019, titled Clarification on scope of support services to exploration, mining or drilling of petroleum crude or natural gas or both – reg. It has been clarified that Extraction will not form part of 998622 Support services to other mining n.e.c.

•

That the Applicant humbly submits that the Manufacturing services under SAC 9988 entail processing inputs of others without transferring production risk. In the instant case, Singhal Enterprises assumes full risk and liability for operational outcomes, with BSLC retaining the right to reject unsatisfactory – goods-a clear departure from typical “manufacturing service”. In support of this contention the Appellant is relying on Ujagar Prints v. Union of India 39 ELT 493 (SC)/(1989) 39 ELT 493 (SC): This case examined job-work in the textile industry, where “manufacture” was distinguished by whether the processor assumed economic risk and operated with autonomy. The Supreme Court established that control and risk transfer indicate activity of manufacturing rather than service provision.

•

That the Applicant humbly submits that the Operations of M/s Singhal Enterprises amounts to manufacture. The transformation of raw, unmarketable limestone/ dolomite into sized, graded limestone satisfies the “marketability” and “distinct character” test set by the Supreme Court. Union of India v. Delhi Cloth & General Mills AIR 1963 SC 791: The case addressed whether the process of converting raw materials results in a new, marketable product. The Court held that marketability and recognition as a distinct commodity is key to qualifying as manufacture. Risk and economic substance are integral. Singhal Enterprises bears all risks until production of a marketable product; BSLC’s role is restricted to final acceptance.

•

That the Applicant humbly submits that the detailed classification of BSLC’s contract with Singhal Enterprises as manufacture under GST is significantly reinforced when examining the implications of risk transfer. When the contractor assumes the entire operational and commercial risk -including rejection by the principal for non-conforming goods-the economic substance shifts from a service to a goods supply, supported by both GST literature and case law precedents.

•

That the applicant also submits a list of the following cases in support of their contention:

(a)

CCE v. Rajasthan State Chemical Works/ (1991) 55 ELT 444 (SC) Crushing/sieving minerals into various grades Is grading and sizing manufacture? Yes. Physical transformation creates a new commercial product.

(b)

Empire Industries Ltd. v. Union of India / (1985) 20 ELT 179 (SC) processed into dyed/printed fabrics Does change in appearance, character, use qualify? Yes. Emergence of a distinct product meets manufacture test

(c)

Tata Iron & Steel Co. Ltd. v. State of Bihar AIR 1958 SC 452 Conversion of iron ore for specialized industrial use Does processing of ores to forms usable in industry amount to manufacture? Yes. Transformation to industrial commodities is manufacture.

(d)

NMDC Ltd. AAR (2018-TIOL-123-AAR-GST-KAR) Crushing/sizing iron ore into calibrated lumps Does crushing/sizing mined ore create a new commodity? Yes. New marketable product emerges.

(e)

South Bihar Sugar Mills v. Union of India (SC)/ (1978) 2 ELT J336 (SC) Processing raw molasses into sugar Is manufacture present if end-use and character are transformed? Yes. Commodity with new identity and use is manufacture.

(f)

Kores (India) Ltd. v. CCE (2004) 174 ELT 7 (SC) Assembling/labeling typewriter ribbons Does market recognition confer manufactured status? Yes. Distinct use/identity through assembly is manufacture.

3. Submission of jurisdictional tax authority on Advance Ruling Application:

The Jurisdictional Tax Authority vide letter dated 03.12.2025 has made following submissions:

A. On Admissibility

The questions raised pertain to the classification of goods and/ or services, and determination of whether the activities undertaken by M/s Singhal Enterprises (the contractor engaged by the applicant, M/s The Bisra Stone Lime Company Limited) amount to ‘manufacture’.

No proceedings on the same issue are pending or have been decided in the case of the applicant under the provisions of the CGST/OGST Act, 2017. In terms of Section 98(2) of the CGST/OGST Act, 2017, an application for advance ruling shall not be admitted only where the question raised is already pending or has been decided in any proceedings under the Acts.

B. On Merit:

As per Section 2(72) of the CGST/OGST Act, 2017, ‘manufacture’ requires the emergence of a product having a distinct name, character, and use. In the present case, the raw material, i.e., limestone/dolomite, continues to remain the same mineral both before and after the processing activities. The name, chemical composition and inherent characteristics remain unchanged. The operations undertaken – crushing, screening and sizing – result only in physical alteration to existence any chemically or commercially distinct commodity. Accordingly, these processes constitute mere processing for improved form or usability and do not satisfy the ‘distinct commodity’ test contemplated under Section 2(72) of the CGST/OGST Act, 2017.

Section 7(1) of the CGST/OGST Act, 2017 read with Schedule II, classifies a supply based on the actual activity performed, not on the contractual allocation of commercial or operational risk. Shifting risk to the contractor does not alter the nature of the process. For GST purposes, ‘manufacture’ exists only when a new product with a distinct name, character and use emerges. Hence, contractual terms do not convert the underlying activity into manufacture.

In the present case, the ownership of the minerals continues to vest with M/s The Bisra Stone Lime Company Limited at all stages. The contractor does not acquire title to the goods but only undertakes processes such as crushing, screening and sizing on the inputs belonging to the applicant. As per Section 2(68) of the CGST/OGST Act, 2017, any treatment or processes carried out by a person on goods owned by another person squarely falls within the definition of ‘Job Work’. Further, the Scheme of Classification of Services places such activities under Chapter 9988, titled ‘Manufacturing Services on Physical Inputs Owned by Others’. Accordingly, the activity in this case does not amount to manufacture of goods but is a job work service classified under Service Code 9988.

Since the processing does not result in the emergence of a new commodity with a distinct name, character or use, the activity cannot be taxed as manufacture of goods. Instead, it takes the form of a service performed on goods belonging to another person and is accordingly classifiable under SAC 9988 as ‘Manufacturing services on Physical Inputs Owned by Others.

4. Personal Hearing:

During personal Hearing, Sri Akash Kapoor, Advocate, Authorized Representative of the applicant appeared before the Advance Ruling Authority on 25.11.2025 wherein he has been appraised of Section 95(a) of the CGST/OGST Act, 2017 concerning to admissibility /maintainability of their Application for which he sought 02 weeks time. Shri Akash Kapoor, Advocate has appeared before the Authorities of Advance Ruling on 09.12.2025 and submitted their supporting documents i.e. case laws/ additional reply concerning to admissibility /maintainability of their Application and requested to pass order as this Authority, may deem fit and proper in the facts and circumstances of the case.

5. Discussion & findings

We have gone through the advance ruling application, question on which Advance Ruling has been sought and the applicant’s interpretation of law and/or facts, as the case may be, in respect of the question asked. Before discussing the merits of the application, let us check the admissibility and maintainability of the application in consonance with the provision enshrined in the Section 95 of CGST/OGST Act, 2017. Section 95(a) of CGST Act, 2017 reads as:

(a) “advance ruling” means a decision provided by the Authority or the Appellate Authority 1[or the National Appellate Authority] to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 1002[or of section 101C], in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant;

The above provision prescribes Advance Ruling on matter or on questions as specified in Section 97(2) of the Act in relation to the supply of Goods or Services or both being undertaken or proposed to be undertaken by the applicant. Here in the case in hand, the applicant sought Advance Ruling in relation to the service provided by one of their supplier i.e. (M/s. Singhal Enterprises). The above findings was appraised to the applicant during the course of personal hearing wherein the applicant sought time to produce detailed reply encompassing case laws/ judgment etc relating to maintainability of their application. The applicants through their Authorized Representative, Shri Akash Kapoor, Advocate submitted relied upon documents along with written submission to substantiate their position regarding admissibility of the application. The relevant facts enumerated in their additional reply dated 07.12.2025 is mentioned below:

4. That Section 95(c) of the CGST Act, 2017 defines the expression “applicant” to mean any person registered or desirous of obtaining registration under the said Act. The said definition is couched in the widest possible terms and does not employ any words of limitation such as “supplier”, “taxable person supplying goods or services” or any similar restrictive description. The Applicant, being a registered person under the GST laws, squarely falls within the said statutory definition of “applicant”.

5. That Section 97(1) of the CGST Act permits an applicant to seek an advance ruling on any question specified in sub-section (2) thereof, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Section 97(2), inter alia, covers questions relating to classification of goods or services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of liability to pay tax, and whether any particular activity amounts to or results in a supply of goods or services or both. These questions may arise with equal force for a service recipient whose tax position, pricing and input tax credit entitlement are directly dependent upon the proper characterization of the underlying transaction.

6. That it is respectfully submitted that nothing in the language of Section 95(c) or Section 97 of the CGST Act restricts or confines the remedy of advance ruling only to a supplier of goods or services. On the contrary, the combined reading of these provisions makes it clear that any registered person affected by the GST implications of a transaction in relation to supply is entitled to approach this Hon’ble Authority.

7. That the above understanding now stands judicially confirmed by the Hon’ble High Court at Calcutta in the case of Anmol Industries Limited v. West Bengal Authority for Advance Ruling, GST 98 GST 546/75 GSTL 46 (Calcutta)/ M.A.T. 630 of 2023, wherein the Hon’ble Court, while dealing specifically with an Advance Ruling Application filed by a recipient of leasing services, has been pleased to hold that the definition of “applicant” under Section 95(c) is of the widest amplitude and that there is no statutory bar preventing a service recipient from seeking an advance ruling.

8. That in Anmol Industries (supra), the Hon’ble High Court further held that rejection of an application for advance ruling solely on the ground that the applicant was a service recipient is contrary to the scheme of the Act, and that an applicant who is a recipient may validly seek clarification on issues such as applicability of exemption notification, rate of tax and classification, as these matters directly affect the applicant’s tax obligations and entitlements.

9. That again, in the case of Gayatri Projects Limited v. Assistant Commissioner of State Tax, Durgapur Charge 91 GSTL 419 (Calcutta) /M.A.T. 2027 of 2022, the Hon’ble High Court at Calcutta reiterated that the term “applicant” under Section 95(c) covers any registered person whose tax position is impacted and that the authorities under the Advance Ruling mechanism cannot confine the locus exclusively to suppliers. The Hon’ble Court emphasized that such a restrictive approach is not borne out by the statutory text.

10. That the aforesaid judgments in Anmol Industries (supra) and Gayatri Projects (supra) authoritatively affirm that a recipient of services has the locus standi to seek an advance ruling and that an interpretation which excludes recipients would defeat the very object of certainty and predictability sought to be achieved by the advance ruling scheme under GST.

11. That in the present case, the question whether the activities undertaken by M/s Singhal Enterprises for and on behalf of the Applicant amount to “manufacture” under Section 2(72) of the CGST Act, 2017 is of direct and substantial relevance to the Applicant for, inter alia, the following reasons:

(a)

it impacts the applicable rate of tax;

(b)

it determines the characterization of the outward supplies made by the Applicant; and

(c)

it has a material bearing on the existence and extent of inverted duty structure and consequential accumulation of input tax credit in the hands of the Applicant.

We have gone through the above submission and analyze the judgment dated 21.04.2023 of Hon’ble High Court of Calcutta in the case of Anmol Industries Limited (supra) in consonance with the case in hand. We observed that, while disposing the appeal on locus standi to file application for Advance Ruling being a recipient of service, Hon’ble High Court of Calcutta while allowing the appeal, held that,

“the appellant clearly fall within the definition of “applicant” as defined under Section 95(c) of the Act, therefore we are of the view application filed by the applicants before the AAR has to be decided on merit.”

Hon’ble High Court also relied upon the decision of Hon’ble High Court of Calcutta in case of Gayatri Projects Limited & Anr. v. Assistant Commissioner of State Tax, Durgapur Charge (supra) wherein the court had taken note of Section 95(C) and held that, the Act defines “applicant” to mean any person registered or desirous of obtaining registration under the Act and in the said case, the appellants being registered dealer under the provisions of the Act would fall within the definition of “appellant” as defined under Section 95 (C) of the Act, though the appellants therein were not parties to the proceedings before the AAR.

It is worth mentioning that, in compliance to the above decision of Hon’ble High Court of Calcutta, the Advance Ruling Authority of West Bengal Anmol Industries Ltd., In re (AAR – WEST BENGAL) (WBAAR) vide order 24/WBAAR/2023-24 dated 20.12.2023 has issued ruling on merit considering facts and circumstances of the case.

As discernible from the above facts, we found that, the issue raised herein in the present application is marked resemblance to facts referred in the above judgment of Hon’ble High Court of Calcutta. At this juncture, We also take cognizance of Judgment of Bombay High Court in case of Commercial of IncomeTax, Vidarbha v. Smt. Godavari Devi Saraf [1978] 113 ITR 589 , wherein the Court held that until a contrary decision is given by any other competent High Court, it is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of land. In that sense, the decision of Gujarat High Court is binding on the authorities below.

In view of the above position of law, we proceed to decide the Advance Ruling application on merit. We have carefully examined the submissions made by the applicant and the jurisdictional officer, the documents placed on record, and the statutory provisions applicable to the present case. The core issue for determination is whether the activities of crushing, screening and sizing of limestone/dolomite result in “manufacture” as defined under Section 2(72) of the CGST Act, 2017 or whether the same constitutes a service in the nature of job work.

Statutory Position on “Manufacture”

5.3 Section 2(72) of the CGST Act, 2017 defines manufacture as:

“Processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term “manufacturer” shall be construed accordingly.”

Thus, for an activity to qualify as manufacture, all three tests –

(i)

distinct name,

(ii)

distinct character, and

(iii)

distinct use –

must be satisfied cumulatively.

Further reference is invited to the following judicial pronouncement:

The Hon’ble Supreme Court in Delhi Cloth & General Mills Co. Ltd. (supra) laid down the classic test of manufacture, holding that:

“Manufacture implies a change, but every change is not manufacture. There must be transformation whereby a new and different article emerges having a distinct name, character or use.”

The applicant contended that crushing, screening and sizing result in marketable limestone of different sizes suitable for industrial use and therefore the activity amounts to manufacture. This argument is untenable as marketability by itself is not a determinative test for manufacture. What is required under Section 2(72) of the CGST Act is the emergence of a new product with a distinct name, character and use. The Hon’ble Supreme Court in Aman Marble Industries Pvt. Ltd. v. CCE (SC)/2003 (157) ELT 393 (SC) held that even though marble slabs are marketable and commercially usable, cutting and sizing of marble blocks does not amount to manufacture, as the commodity continues to remain marble. Applying the same ratio, crushing and sizing of limestone, which continues to remain limestone both before and after processing, cannot be regarded as manufacture. In the instant case, the raw material as well as the processed output is limestone/dolomite. The chemical composition, mineral identity and commercial understanding of the product remain unchanged. The processes undertaken-namely crushing, screening and sizing-only alter the physical dimensions of the mineral to make it suitable for transportation or specific industrial usage. Such processes do not result in the emergence of a new product having a distinct name, character or use. The activity therefore fails the statutory test laid down under Section 2(72) of the CGST Act, 2017.

Further, the applicant has contended that physical transformation of limestone through crushing and sizing should be treated as manufacture. This submission runs contrary to settled law as the Hon’ble Supreme Court in Delhi Cloth & General Mills Co. Ltd. (supra) categorically held that:

“Every change is not manufacture; there must be transformation into a new and distinct article.”

In the present case, there is no transformation into a new article. Only physical dimensions are altered, while the chemical composition, mineral identity and commercial nomenclature remain unchanged.

With regards to the applicant’s Submission on Contractor Bears Commercial / Operational Risk, we observed that, the contention is irrelevant for GST classification purposes. The CGST Act does not recognize allocation of commercial risk as a criterion for determining manufacture or supply of goods.

Section 7 of the CGST Act read with Schedule II mandates classification based on the nature of activity actually performed, not on contractual risk-sharing arrangements. Reference is also drawn to the provision under Section 7 of CGST Act, 2017 read with Sl. No. 03 to Schedule-II which prescribes:

3. Any treatment or process which is applied to another person’s goods is a supply of service.”

M/s. Singhal Enterprises here in the case in hand, undertakes treatment or process which is applied to applicant’s goods and as such the GST Act itself bars such type of activity as supply of Goods. Therefore, even if certain risks are contractually borne by the contractor, the underlying activity continues to be processing of goods owned by another person, which does not amount to manufacture.

The applicant claimed that processed limestone is recognized as a separate commercial commodity in trade parlance. This submission is factually and legally unsustainable. Limestone of varying sizes is traded as limestone itself and not as a new commodity with a separate commercial identity. In the present case, limestone does not cease to exist; it only changes in size. Hence, no new commercial commodity emerges.

In view of the foregoing discussions, we are of the opinion that the activity carried out by M/s. Singhal Enterprises does not amount to manufacture under Section 2(72) of CGST/OGST Act, 2017.

6. In view of the above, we pass the following order:

RULING

Q.1 Whether the activity carried out by M/s. Singhal Enterprises amounts to “manufacture” under Section 2(72) of the CGST Act, 2017.

Ans: Negative.