Purchase tax on manufacturing fuel rejected where charcoal was only an ancillary consumable, not a raw material.

Charcoal used merely as fuel in a manufacturing process was not liable to purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959. The provision applies only where untaxed goods are consumed or used as an ingredient or raw material that goes into the end-product; ancillary consumables used only as an aid, including fuel for heating, do not satisfy that test. The amended words "or uses" did not change the position for the relevant assessment year. The levy was therefore set aside in favour of the assessee.

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Issues: Whether charcoal used as fuel in the manufacturing process was liable to purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Liability under section 7-A arises only when goods purchased without tax are consumed or used in the manufacture of other goods as an ingredient or raw material which goes into the making of the end-product. Goods used merely as an aid, such as fuel for heating, are not consumed in manufacture in the statutory sense. The amended words "or uses" did not assist the Revenue for the assessment year in question, and the governing principle remained that ancillary consumables used in the manufacturing process do not attract the levy.

Conclusion: Charcoal used as fuel was not taxable under section 7-A, and the levy was set aside in favour of the assessee.

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