1991 (8) TMI 294 - HC - VAT and Sales Tax

High Court upholds assessment of lime shell to lime powder under TN Sales Tax Act

The High Court of Madras dismissed the assessee's appeal against the Joint Commissioner's order to revise the assessment under section 7-A of the Tamil ... Consumption in manufacture - identity and transformation of raw material - application of section 7-A of the Act to consumed goods - purchase tax on goods purchased from non-dealers which have not suffered tax - suo motu revision under section 34 of the Tamil Nadu General Sales Tax Act, 1959Consumption in manufacture - identity and transformation of raw material - application of section 7-A of the Act to consumed goods - Whether the purchase of lime shell, subsequently burnt and processed into lime powder, is a purchase consumed in manufacture within the meaning of section 7-A and liable to be included in purchase turnover. - HELD THAT: - The Court found on the material before it that lime shell purchased by the assessee is burnt together with coal, coal dust is removed and the resultant product is crushed into lime powder. The process effects a series of changes by which the original commodity (lime shell) loses its identity and is wholly transformed into a new commercial article (lime powder). The Court held that the word 'consume' contemplates complete exhaustion of the purchased goods in the manufacture of another good so that the original commodity no longer remains. Applying this legal principle, the Court concluded that lime shell has been consumed in the manufacture of lime powder and therefore falls within the ambit of section 7-A. The Appellate Assistant Commissioner had failed to apply these requirements of section 7-A, and the Joint Commissioner was correct in exercising revision to include the purchase turnover in assessment. [Paras 3]Purchase turnover of lime shell (Rs. 23,447) was properly held to be consumed in the manufacture of lime powder and liable to be brought to assessment under section 7-A; the Joint Commissioner's revision is sustained.Final Conclusion: The appeal is dismissed; the Joint Commissioner rightly set aside the Appellate Assistant Commissioner's order and held that the purchase of lime shell, having been consumed in manufacture of lime powder, is includible under section 7-A. The High Court of Madras dismissed the appeal filed by the assessee against the Joint Commissioner's order to revise the assessment under section 7-A of the Tamil Nadu General Sales Tax Act, 1959. The dispute was regarding the purchase turnover of lime shell, which was processed into lime powder. The court held that the lime shell was consumed in the manufacturing process, losing its identity, and therefore, the purchase turnover was rightly brought to assessment under section 7-A. The appeal was dismissed, and no costs were awarded.