Concessional sales tax for factory machinery upheld where reverse osmosis equipment supported manufacturing through indirect use.

Concessional tax under section 3(5) of the Tamil Nadu General Sales Tax Act was available where the sold machinery fell within the Eighth Schedule and was used in the buyer's factory site within the State for manufacture of goods. The reverse osmosis plant machinery was treated as machinery worked by electricity and not specifically excluded, and its installation for recycling and purifying water used in textile dyeing satisfied the statutory use requirement. The phrase "used in his factory site within the State for the manufacture of any goods" was construed broadly to cover direct and indirect use. The assessee therefore met all conditions for the concessional rate, and the rejection by lower authorities was unsustainable.

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Issues: Whether the assessee was entitled to concessional tax under section 3(5) of the Tamil Nadu General Sales Tax Act, 1959 on sale of reverse osmosis plant machinery, and whether such machinery satisfied the statutory requirements of being an Eighth Schedule item used in the factory site within the State for manufacture of goods.

Analysis: Section 3(5) grants concession where the goods sold are items in the Eighth Schedule, are used in the buyer's factory site within the State, and are used for manufacture of goods. The machinery sold was held to fall within Entry 3 of the Eighth Schedule as machinery worked by electricity and not specifically excluded. The Court found that the machinery was installed and used in the customer's factory for recycling and purifying water required in the textile dyeing process. The expression "used in his factory site within the State for the manufacture of any goods" was read broadly to include direct as well as indirect use, and the provision was treated as a beneficial one warranting liberal construction.

Conclusion: The assessee satisfied all the conditions of section 3(5) and was entitled to the concessional rate of tax. The rejection by the lower authorities was unsustainable.

Ratio Decidendi: A machinery item covered by the Eighth Schedule qualifies for concessional tax under section 3(5) when it is used in the factory, directly or indirectly, as an aid in manufacturing goods, and the provision must receive liberal construction as a beneficial tax concession.

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