Pre-commencement building material purchases lack the required business nexus and fall outside purchase tax liability.

Purchase tax applies only to goods bought in the course of business, and the extended definition of business still requires a direct nexus with the actual trade or manufacturing activity. Building materials bought before commencement of the assessee's synthetic yarn manufacturing operations, for construction of a factory, lacked that nexus and were not incidental or ancillary to the business. Those pre-commencement purchases therefore did not attract purchase tax, and the levy was correctly set aside.

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Issues: Whether purchases of building materials made before commencement of the assessee's manufacturing business were purchases made in the course of business and were therefore liable to purchase tax.

Analysis: Purchase tax under section 7 attaches only where the goods are purchased in the course of business. The extended definition of business in section 2(bb) includes transactions connected with, or incidental or ancillary to, trade, commerce or manufacture, but such transactions must still bear a direct nexus with the business activity. Here, the assessee had not commenced manufacture of synthetic yarn during the relevant assessment periods. The building materials were purchased for construction of a factory before business operations began. Such pre-commencement construction activity was held not to have the required direct connection with the actual manufacturing business, nor could it be treated as incidental or ancillary to that business.

Conclusion: The purchases of building materials were not liable to purchase tax, and the Tribunal was correct in setting aside the levy.

Ratio Decidendi: Purchases made before commencement of the taxable business, and lacking a direct nexus with the actual business activity, are not purchases made in the course of business and do not fall within the incidental or ancillary limb of the statutory definition of business for purchase tax purposes.

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