Raw material test in purchase tax: paddy husk used only as fuel was not taxable as raw material in manufacture.

Paddy husk used only as fuel in the manufacture of liquor was not treated as raw material for purchase tax under section 9 of the Haryana General Sales Tax Act, 1973. The operative test was whether the goods were consumed as a component going into the finished product, rather than merely as an aid in the manufacturing process. Because the husk did not form part of, or get transformed into, the liquor, it fell outside the concept of raw material. Purchase tax on its turnover was therefore not leviable.

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Issues: Whether paddy husk used as fuel in the manufacture of liquor could be treated as raw material so as to attract purchase tax under section 9 of the Haryana General Sales Tax Act, 1973.

Analysis: Paddy husk was used only as fuel in the manufacturing process and did not form part of, or get transformed into, the end product. Goods used for ancillary purposes in manufacture are not treated as raw material for the purpose of purchase tax. The principle applied was that consumption must be as raw material or as a component going into the making of the finished product, and not merely as an aid to manufacture.

Conclusion: The paddy husk could not be regarded as raw material within section 9 of the Act, and purchase tax on its turnover was not leviable.

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