Purchase tax applies when old jewellery is melted into new jewellery, as the goods are consumed in manufacture.

Purchase tax was attracted under section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959 where old gold jewellery bought from non-dealers was melted and converted into new jewellery. The Court treated the old jewellery as goods consumed in the manufacture of a different commercial article, and held that gold jewellery in its ordinary commercial sense was distinct from the generic description relied on by the assessee. As the statutory conditions for levy were satisfied, the purchase tax challenge failed and the levy was upheld.

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Issues: Whether purchase tax under section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act, 1959 was attracted when old gold jewellery was purchased, melted and converted into new jewellery.

Analysis: The purchase of old jewellery from non-dealers followed by melting and conversion into fresh jewellery amounted to consumption of the old goods in the manufacture of other goods. The expression used in the provision is "goods", and gold jewellery in its ordinary commercial sense was treated as a specific article distinct from the generic description relied upon by the assessee. The statutory conditions for levy under section 7-A(1)(a) were therefore satisfied.

Conclusion: The levy of purchase tax was upheld and the challenge failed.

Ratio Decidendi: Where purchased goods are consumed in the process of making a different commercial article, the transaction falls within section 7-A(1)(a) and purchase tax is attracted.

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