Purchase tax under Section 7-A applies despite sale exemption where exempt goods are consumed in manufacture.

Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 was treated as an independent charging and remedial provision designed to prevent leakage of tax where goods, though otherwise taxable, do not suffer tax because of exemption or other statutory reasons and are later consumed or otherwise rendered unavailable for taxation in the State. An exemption relating to the sale of coconuts and copra did not extend to the assessee's purchase liability, and an exemption notification for purchases by persons other than oil millers did not exclude Section 7-A where its conditions were met. The earlier precedent relied on concerned sale, not purchase, and was therefore inapplicable. The oil miller was liable to purchase tax and the contrary view was unsustainable.

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Issues: Whether the assessee, an oil miller purchasing coconuts and copra for manufacture, was liable to purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 notwithstanding exemption of the sale of those goods and the exemption notification relating to purchases by persons other than oil millers.

Analysis: Section 7-A is an independent charging as well as remedial provision intended to plug leakage and prevent evasion of tax. It applies where goods, though taxable under the Act, do not suffer tax because of exemption or other statutory factors and are subsequently consumed, otherwise dealt with, or rendered unavailable for taxation in the State. The exemption relied on by the assessee related to sale and did not extend to its purchase liability. Section 17 of the Tamil Nadu General Sales Tax Act, 1959 permits exemptions to be granted for specified classes of goods or persons and at specified points, but such exemption does not by itself exclude liability under Section 7-A where the statutory conditions for purchase tax are satisfied. The earlier decision relied on by the Tribunal concerned sale and not purchase, and was therefore inapplicable.

Conclusion: The assessee was liable to purchase tax under Section 7-A, and the Tribunal's contrary view was unsustainable.

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