Exemption notification and purchase tax liability on synthetic gems were read together to deny purchase tax under the statute.

An exemption notification under the sales tax law covering polished synthetic gems meant the goods were not treated as liable to tax for purchase-tax purposes under section 5A. The court applied the combined effect of the charging provision and the exemption, holding that if no tax is payable in the relevant circumstances under section 5, the purchase-tax condition under section 5A is not satisfied. The distinction between total non-liability and exemption did not defeat the assessee, and purchase tax was not attracted on the synthetic gems.

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Issues: Whether synthetic gems, though generally taxable under the charging provision, ceased to be goods liable to tax for the purpose of purchase tax under section 5A because of the exemption notification issued under section 10, and whether the purchases were in circumstances in which no tax was payable under section 5.

Analysis: Liability under section 5A depends upon purchase of goods the sale or purchase of which is liable to tax under the Act and upon the purchase taking place in circumstances in which no tax is payable under section 5. The exemption notification under section 10 granted exemption in respect of the sale of polished synthetic gems. On the combined effect of the charging provision and the exemption, the goods could not be treated, for practical purposes, as goods liable to tax for the purpose of section 5A. The later Supreme Court view on an analogous provision was followed, and the distinction between total non-liability and exemption was held not to defeat the assessee where the statutory result was that no tax was payable in the relevant circumstances.

Conclusion: The exemption covered the synthetic gems so that section 5A was not attracted, and the assessee was not liable to purchase tax on those goods.

Ratio Decidendi: Where an exemption notification under the sales tax law effectively removes liability at the relevant point of taxation, the goods are treated as not liable to tax for the purpose of the purchase-tax charging provision, and the statutory condition that no tax is payable is satisfied.

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