Manufacturing consumption for purchase tax: purchased goods losing identity in production are treated as consumed.

Lime shell purchased from non-dealers and processed into lime powder was treated as consumed in manufacture because the process destroyed the original identity and produced a distinct commercial commodity. For purchase tax purposes under section 7-A of the Tamil Nadu General Sales Tax Act, goods are consumed when they are exhausted in the manufacturing process and emerge as a new article. Applying that principle, the Madras HC sustained the levy and rejected the assessee's challenge.

---

---

Issues: Whether lime shell purchased from non-dealers and converted into lime powder was consumed in the manufacture of another commodity so as to attract purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Lime shell was burnt along with coal, the coal dust was removed, and the resultant product was crushed into lime powder. The process brought about a complete change in identity, and lime shell and lime powder were treated as distinct commercial commodities. For the purpose of section 7-A, goods are consumed when they are exhausted in the manufacturing process and lose their identity in the emergence of a new article. On these facts, lime shell was consumed in the manufacture of lime powder.

Conclusion: The levy under section 7-A was rightly sustained, and the assessee's challenge failed.

Ratio Decidendi: Where purchased goods lose their identity and emerge as a new and distinct commercial commodity in the manufacturing process, they are treated as consumed for the purpose of purchase tax.

---