Purchase tax applies to goods consumed in construction activity when bought from unregistered dealers under the wider meaning of "or otherwise".

Section 6-A(ii)(a) of the Andhra Pradesh General Sales Tax Act attracts purchase tax when goods bought from an unregistered dealer are consumed in construction activity, not only when used in manufacturing goods for sale. The phrase "or otherwise" was held to widen the charging provision beyond manufacture for sale, so goods that cease to exist in their original form in building construction fall within its scope. The narrower construction in Pio Food Packers was rejected to that extent, while the earlier view in Ganesh Prasad Dixit was accepted on this point.

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Issues: Whether section 6-A(ii)(a) of the Andhra Pradesh General Sales Tax Act, 1957 applies when goods purchased from unregistered dealers are consumed in construction activity and not in the manufacture of movable goods for sale.

Analysis: Section 6-A(ii)(a) levies purchase tax where goods purchased from a person other than a registered dealer are consumed in the manufacture of other goods for sale or otherwise. The phrase "or otherwise" qualifies the mode of consumption and is not confined to cases where the original goods are used only in the manufacture of other goods for sale. Goods used in building construction cease to exist in their original form and are therefore brought within the charging provision. The contrary view that the provision applies only when there is manufacture of other goods for sale was rejected, and the narrower construction in Pio Food Packers was overruled to that extent while the earlier understanding in Ganesh Prasad Dixit was accepted on this point.

Conclusion: Section 6-A(ii)(a) applies to the respondents' purchases and purchase tax is payable; the challenge to assessment fails.

Ratio Decidendi: Under section 6-A(ii)(a), purchase tax is attracted when goods purchased from an -registered dealer are consumed either in the manufacture of other goods for sale or are consumed otherwise, including in construction activity, because the expression "or otherwise" is not confined to the word "sale".

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