Paper cones and tubes used in yarn winding qualify for concessional sales tax as goods connected with manufacture.

Paper cones and tubes sold to spinning mills for winding yarn were treated as goods used in connection with manufacture, not as parts or accessories of textile machinery, because they were neither permanent attachments nor functional fittings of the machinery. They were also not packing material in the strict sense, since yarn was wound on them as part of the manufacturing process rather than for carriage or dispatch. On that basis, the concessional levy under the Tamil Nadu General Sales Tax Act applied, and the higher assessments at four per cent were unsustainable; the goods were eligible for tax at three per cent.

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Issues: Whether paper cones and tubes sold to spinning mills for winding yarn are to be classified as parts and accessories of textile machinery under entry 76, Part B of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, or as goods sold in connection with manufacture so as to attract concessional levy under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Paper cones and tubes used for winding yarn were held not to be components, parts, or accessories of textile machinery, because they were neither permanent attachments nor functional fittings of the machinery. They were also not packing material in the strict sense, since yarn was wound on them as part of the manufacturing process rather than being packed or wrapped for carriage. Reading section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, the sale of any goods used in connection with manufacture inside the State was held to qualify for the concessional rate, and the winding of yarn on paper cones and tubes was treated as part of the manufacturing process.

Conclusion: The impugned assessments at four per cent were unsustainable, and paper cones and tubes were held eligible for concessional levy at three per cent under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959.

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