Purchase tax liability on mere processing does not arise where boulders are broken into jelly without manufacture.

Purchase tax under section 6 of the Karnataka Sales Tax Act arises only when goods bought without tax are consumed in the manufacture of other goods for sale or otherwise. Mere breaking of boulders into jelly was held to be processing, not manufacture, so the statutory condition for purchase tax was not satisfied. Although an earlier broader view had been noted, the later Supreme Court approach was treated as binding and controlled the result. The assessee was therefore not liable to purchase tax on the conversion of boulders into jelly.

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Issues: Whether the assessee, who purchased boulders under circumstances in which no tax was leviable at the purchase point and converted them into jelly by a process not amounting to manufacture, was liable to purchase tax under section 6 of the Karnataka Sales Tax Act.

Analysis: The liability under section 6 arises when taxable goods are purchased without tax under section 5 and are then consumed in the manufacture of other goods for sale or otherwise. The conversion of boulders into jelly by mere breaking was held not to be a manufacturing process. A prior three-Judge decision supporting a broader reading of the provision was noted, but a later three-Judge decision held that where the original goods are merely processed without any manufacture, the purchase tax provision is not attracted. The later Supreme Court view was treated as binding.

Conclusion: The assessee was not liable to purchase tax under section 6 on the conversion of boulders into jelly.

Ratio Decidendi: Purchase tax under section 6 is attracted only when the purchased goods are consumed in the manufacture of other goods; mere processing that does not amount to manufacture does not create the liability.

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