Purchase tax under section 7-A applies only when statutory conditions are cumulatively met; non-verifiability alone is irrelevant.

Section 7-A of the Madras General Sales Tax Act, 1959 was held to operate only where the purchaser is a dealer, the purchase is in the course of business, the goods are otherwise taxable, and no tax is payable under sections 3, 4 or 5; those conditions are cumulative. Mere non-verifiability of the seller's earlier transactions is not a statutory test and cannot shift purchase-tax liability to the buyer. On that reasoning, purchase tax could not be levied on butter used in manufacturing ghee or on ghee involved in consignment sales where the statutory preconditions were absent, and the impugned purchase-tax demands were set aside.

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Issues: Whether section 7-A of the Madras General Sales Tax Act, 1959 could be invoked merely because the dealer's purchases were from registered dealers whose prior transactions were not verifiable, and whether purchase tax could be levied where the purchases were already taxable at the sales stage or were otherwise outside the charging conditions of that provision.

Analysis: Section 7-A was treated as a levy of purchase tax that applied only when the purchaser was a dealer, the purchase was in the course of business, the goods were otherwise liable to tax under the Act, and, in addition, the circumstances existed in which no tax was payable under sections 3, 4 or 5. Those conditions were held to be cumulative. The expression "no tax is payable" was understood as referring to situations of exemption or non-liability within the statutory scheme, not to cases where earlier transactions were merely difficult to verify. The Court held that verifiability of the seller's transactions was not a statutory test under section 7-A and could not justify shifting tax liability to the purchaser. The same reasoning also showed that purchase tax could not be levied on butter purchases used in manufacturing ghee, or on ghee purchases involved in consignment sales, where the statutory preconditions for section 7-A were absent.

Conclusion: Section 7-A could not be invoked on the ground of non-verifiability of the seller's transactions, and the purchase-tax levies in question were unsustainable.

Final Conclusion: The petitions succeeded, and the impugned purchase-tax demands were set aside, leaving the department free to proceed only in accordance with the judgment for matters not finally assessed.

Ratio Decidendi: Purchase tax under section 7-A arises only when the statutory conditions of taxable liability and non-payability under the specified charging provisions are cumulatively satisfied; mere non-verifiability of earlier transactions is irrelevant and cannot substitute for those conditions.

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