Purchase tax on raw materials depends on complete loss of identity in manufacture, not mere use in producing finished goods.

Purchase tax under a provision requiring raw materials to be "consumed" in manufacture is attracted only when the goods are devoured or exhausted so that their identity is completely lost. Where art silk yarn was used in weaving art silk cloth but retained its identity in the finished product, the process amounted to use in manufacture, not consumption in the statutory sense. On that basis, purchase tax was not leviable on the yarn purchase turnover.

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Issues: Whether purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959 was attracted on the purchase of art silk yarn used in weaving art silk cloth.

Analysis: The relevant assessment year was 1976-77, when section 7-A turned on whether the purchased raw material was "consumed" in the manufacture of other goods. The governing test was whether the purchased goods were devoured or exhausted in the manufacturing process so that their identity was completely lost. On the facts found, the art silk yarn retained its identity even after being woven into cloth. The process amounted to use of the yarn in manufacture, but not consumption of the yarn in the statutory sense. The reasoning was supported by the principle that a changed form or continued identity of the raw material negatives attraction of purchase tax under section 7-A.

Conclusion: Purchase tax under section 7-A was not leviable on the purchase turnover of the art silk yarn, and the revision failed.

Ratio Decidendi: Purchase tax under a provision requiring goods to be "consumed" in manufacture is attracted only when the purchased goods lose their identity in the manufacturing process; mere use of the goods, resulting in a changed form but not complete exhaustion, is insufficient.

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