Purchase tax and inter-State despatch: local jewellery conversion attracts tax, but personal carriage is not a despatch outside the State.

Old jewellery purchased from non-dealers and converted into new jewellery for local sale was treated as consumed in manufacture, so purchase tax was payable under section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959. By contrast, goods personally carried by the dealer from Tamil Nadu to Bombay were not regarded as being "despatched" outside the State within section 7-A(1)(c), because the provision contemplates sending goods and not mere personal conveyance by the owner. The turnover relating to personal carriage was therefore excluded from tax, and the matter was remitted for consequential recalculation of liability.

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Issues: (i) Whether purchase tax was payable under section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959 on the turnover relating to old jewels converted into new jewels and sold locally. (ii) Whether goods personally carried by the dealer from Tamil Nadu to Bombay could be said to have been "despatched" outside the State under section 7-A(1)(c) of the Tamil Nadu General Sales Tax Act, 1959.

Issue (i): Whether purchase tax was payable under section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959 on the turnover relating to old jewels converted into new jewels and sold locally.

Analysis: The turnover involved purchase of old jewellery from non-dealers within the State, followed by conversion into new jewellery and sale within the State. The issue was already covered by earlier decisions holding that such old jewellery is consumed in the process of manufacture of new jewellery, bringing the transaction within section 7-A(1)(a).

Conclusion: Yes. The turnover was liable to purchase tax under section 7-A(1)(a), and the assessee failed on this issue.

Issue (ii): Whether goods personally carried by the dealer from Tamil Nadu to Bombay could be said to have been "despatched" outside the State under section 7-A(1)(c) of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The expression "despatches them to a place outside the State" contemplates sending goods from one place to another. On the Tribunal's own finding, the dealer himself carried the old jewellery to Bombay and sold it there after conversion. That mode of transport did not amount to a despatch within the meaning of section 7-A(1)(c). The turnover therefore could not be brought to tax under that clause and had to be excluded from the taxable turnover. The matter was required to go back to the Tribunal for working out the consequential liability on that basis.

Conclusion: No. Section 7-A(1)(c) did not apply to goods personally carried by the dealer, and the assessee succeeded on this issue.

Final Conclusion: The tax references were disposed of by sustaining liability on the local conversion turnover, excluding the turnover relating to personal carriage to Bombay, and remitting the matter for recalculation of the tax liability in accordance with that conclusion.

Ratio Decidendi: Goods personally carried by the dealer from one State to another are not "despatched" within section 7-A(1)(c) of the Tamil Nadu General Sales Tax Act, 1959; the term requires sending of goods, not mere personal conveyance by the owner.

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