Purchase tax liability follows statutory conditions despite seller exemption, and the amended Section 7-A was read consistently.

Purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act applies only where the goods are otherwise liable to tax under the Act. A seller's exemption under Section 17(1) does not, by itself, remove the purchaser's liability when the exemption is qualified, restricted, or dealer-specific and the statutory conditions for purchase tax are met, including consumption in manufacture. The post-amendment wording of Section 7-A was treated as continuing this principle. The assessee was therefore liable to purchase tax, and the seller's exemption did not shield the purchaser from liability.

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Issues: Whether the assessee was liable to purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act when the seller's sales were exempted by notification under Section 17(1), and whether the post-amendment language of Section 7-A altered that liability.

Analysis: The scheme of purchase tax under Section 7-A applies only to goods the sale or purchase of which is liable to tax under the Act. Goods that are wholly exempted from tax at all points do not become taxable goods for the purpose of purchase tax. However, where the exemption is only qualified, restricted, or dealer-specific, the exemption granted at one stage does not take the transaction outside Section 7-A when the purchaser consumes the goods in manufacture or otherwise satisfies the statutory conditions. The amendment to Section 7-A was also considered and the same principle was held to continue to govern liability where the statutory conditions for purchase tax are satisfied.

Conclusion: The assessee was liable to purchase tax under Section 7-A, and the exemption granted to the seller did not protect the assessee from tax liability.

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