Purchase tax on declared goods applies at the raw material purchase stage, even when manufactured goods are stock transferred outside the State.

Purchase tax remained payable where a manufacturer bought declared goods within Haryana as the last purchaser and consumed them as raw material in manufacture; the taxable event was the purchase of the raw material, not the later despatch of finished goods outside the State by stock transfer. The fact that tax on the finished goods was not triggered by an intra-State sale did not alter the nature of the levy, and liability could not be avoided merely because the manufactured goods were transferred otherwise than by sale.

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Issues: Whether the petitioner was liable to pay purchase tax on raw material purchased within the State and used in manufacture of goods sent outside the State by stock transfer, and whether such levy could be avoided on the footing that the taxable event arose only on despatch or consignment of the manufactured goods.

Analysis: Under the Haryana General Sales Tax Act, tax on declared goods is attracted at the stage contemplated by the statute, and declared goods take their meaning from the Central Sales Tax Act. The governing principle, as clarified by the Supreme Court, is that the levy is on the purchase of raw material by the manufacturer, not on the subsequent despatch or consignment of the finished goods. The fact that the purchase tax may be deferred until it is found that sales tax is not payable on the manufactured goods does not alter the nature of the levy. The Court applied the settled position that, where raw material is consumed in manufacture and the finished goods are not sold within the State, purchase tax remains payable by the last purchaser.

Conclusion: The petitioner remained liable to pay purchase tax, and the challenge to the impugned assessment and appellate orders failed.

Ratio Decidendi: Where a manufacturer purchases declared goods within the State as the last purchaser and consumes them in manufacture, the taxable event for purchase tax is the purchase of the raw material, and the liability is not displaced merely because the finished goods are transferred outside the State otherwise than by sale.

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