Concessional purchase scheme and taxable turnover: raw material value could not be added for additional sales tax.

Concessional purchases made on form XVII declarations under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 remained subject to the scheme's conditions: if the goods were not used for manufacture and sale inside the State, section 3(4) required payment of the balance 2% on the purchase value. That liability, however, was distinct from inclusion of the purchase value in the dealer's taxable turnover. As taxable turnover under section 2(p) refers to turnover on which the dealer is liable to pay tax, the value of raw materials/component parts purchased from registered sellers could not be added to the assessee's turnover for levy of additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970.

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Issues: Whether the value of raw materials/component parts purchased on form XVII declarations, which were later used in manufactured goods stock transferred outside the State, could be included in the assessee's taxable turnover for levy of additional sales tax.

Analysis: The concessional purchase scheme under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 enables a dealer to buy goods at 3% for use in manufacture inside the State for sale. Where that condition is violated and the manufactured goods are not sold but are transferred outside the State, section 3(4) fastens liability to pay the balance 2% on the value of the goods purchased. That liability is distinct from treating the purchase value as the assessee's turnover. The taxable turnover under section 2(p) is the turnover on which the dealer is liable to pay tax, and the purchase value in question belonged to the selling registered dealers for assessment purposes. The additional sales tax under section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 applies only where the dealer's own taxable turnover exceeds the statutory threshold, and the impugned purchase value could not be added to the assessee's taxable turnover for that purpose.

Conclusion: The value of the raw materials could not be included in the assessee's taxable turnover for additional sales tax, and the issue was answered in favour of the assessee.

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