Purchase tax on gold jewellery fails where no business purchase by the dealer is shown under the statute

Purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act was held inapplicable because the statutory precondition of a dealer's purchase of goods in the course of business was not satisfied. Gold jewellery disclosed under a voluntary disclosure scheme and later introduced into a partnership firm's capital account could not be treated as a business purchase by the firm, so the charge to purchase tax did not arise. A clarificatory circular could not override the statutory conditions for levy. The assessment was therefore deleted and the assessee's position was upheld.

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Issues: Whether purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act was leviable on gold jewellery disclosed under the voluntary disclosure scheme and brought into the partnership firm's capital account.

Analysis: Section 7-A applies only where a dealer purchases goods in the course of business and, in specified circumstances, uses or disposes of them otherwise than by sale. On the facts found, the gold was disclosed by the wife of one of the partners and was thereafter pooled into the firm's capital account; this could not be treated as a purchase by the firm in the course of its business. The reliance placed on the clarificatory circular did not alter the central legal position that the statutory conditions for purchase tax were absent.

Conclusion: Purchase tax under Section 7-A was not leviable, and the deletion of the assessment was and upheld in favour of the assessee.

Final Conclusion: The revision failed because the statutory precondition of a business purchase by the dealer was not satisfied on the facts found.

Ratio Decidendi: Purchase tax under Section 7-A can be levied only when the dealer has purchased the goods in the course of business and the statutory conditions for the charge are otherwise met.

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