Purchase tax on building materials for staff quarters rejected where construction was not the assessee's business activity.

Purchase tax was not leviable on building materials bought for construction and repairs of staff huts and quarters, because such construction activity was treated as a condition precedent to carrying on or continuing the manufacturing business, not as part of the assessee's business itself. Applying the earlier ruling on the same principle, the court held that materials used for this purpose did not attract purchase tax. The reference was therefore answered in the negative, in favour of the assessee.

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Issues: Whether purchase tax was leviable on building materials purchased for construction and repairs of staff huts and quarters.

Analysis: The question stood concluded by an earlier decision holding that construction activity is a condition precedent to the carrying on or continuance of the manufacturing business, but is not itself the business of the assessee so as to attract purchase tax on building materials used for such activity. The same reasoning applied to the present reference, and no different view was warranted.

Conclusion: The levy of purchase tax on the purchases of building material for construction and repairs of staff huts and quarters was not justified, and the question was answered in the negative in favour of the assessee.

Ratio Decidendi: Purchase tax is not leviable on building materials used for construction or repairs where such activity is not the business of the assessee.

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