Purchase tax on water consumption applies under section 5A when goods are used otherwise than in manufacture.

Section 5A of the Kerala General Sales Tax Act, 1963 was interpreted to tax not only goods consumed in manufacture of goods for sale, but also goods used or disposed of otherwise than by sale. The provision applies once the goods are utilised and cease to remain available in that form for sale or purchase. On that basis, water consumed by the assessee, even if not used in making the end-product, was treated as consumed otherwise and was exigible to purchase tax; the assessee's challenge failed.

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Issues: Whether water charges paid for water consumed otherwise than in the manufacture of the end-product were exigible to purchase tax under section 5A of the Kerala General Sales Tax Act, 1963.

Analysis: Section 5A brings to purchase tax not only goods consumed in the manufacture of other goods for sale, but also goods used or disposed of in any manner other than by way of sale. The interpretation placed by the apex court on the corresponding purchase-tax provision in the Kerala General Sales Tax Act, 1963 made it clear that the legislative intent is to tax consumption of goods in either event, namely, consumption in manufacture or consumption otherwise. Once the goods are utilised and cease to remain available in that form for sale or purchase, the charging provision is attracted. Applying that principle, water used by the assessee, even if not consumed in making the end-product, was consumed otherwise.

Conclusion: Water charges were liable to purchase tax under section 5A of the Kerala General Sales Tax Act, 1963, and the assessee's challenge failed.

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