Spectacles assembled from separate components were treated as manufacture, with frames as second sale and lenses taxable on first sale.

Manufacture and sale of spectacles assembled from separately purchased frames and lenses were treated as manufacture of the final article, not as a works contract under the Tamil Nadu General Sales Tax Act, because the essential elements of a works contract were absent. The frame retained its identity, had already suffered tax earlier, and was treated as a second sale not liable to tax again. The lens, however, was processed into a distinct taxable product and remained taxable at the point of first sale. Separate billing for frame and lens was held permissible and not indicative of tax evasion.

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Issues: Whether the manufacture and sale of spectacles assembled from separately purchased frames and lenses constituted a works contract under section 3B of the Tamil Nadu General Sales Tax Act, 1959, and whether the frame, having already suffered tax, could be treated as a second sale not liable to tax again.

Analysis: The activity was held to be manufacture of spectacles to customer prescription, not a works contract, because the assessee was engaged in producing the final article in its workshop and the essential ingredients of a works contract were absent. At the same time, the court treated the spectacle components separately for tax purposes. The frame retained its identity as a frame, had already suffered tax at the earlier point, and its later sale along with the lens was only a second sale. The lens, by contrast, underwent processing and emerged as a distinct taxable product at the point of first sale. Separate billing for the frame and lens was held to be permissible and not indicative of tax evasion; the entry covering spectacles, sunglasses, goggles, attachments, parts and accessories supported this component-wise treatment.

Conclusion: The frame was not liable to tax again as it was a second sale, while the lens remained taxable at the point of first sale; the assessee's method of separate billing was upheld.

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