Concessional sales tax for factory-installed machinery applies when the equipment is used in manufacturing operations.

Air driers purchased against Form XVII declaration may qualify for concessional sales tax under Section 3(5) of the Tamil Nadu General Sales Tax Act when the goods are covered by Clause (3) of the Eighth Schedule and are installed and used in the purchaser's factory for manufacturing operations. The decisive condition is factory installation and use in manufacturing activity, not direct consumption as raw material or input. On the stated facts, the air drier was installed in the factory and used to control temperature and moisture during production, so it satisfied the statutory requirements for concessional treatment.

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Issues: Whether air drier purchased against Form XVII declaration was eligible for concessional tax rate under Section 3(5) of the Tamil Nadu General Sales Tax Act read with Clause (3) of the Eighth Schedule.

Analysis: Section 3(5) grants concessional tax where goods mentioned in the Eighth Schedule are sold to another dealer for installation and use in his factory site within the State for manufacture of goods. The decisive requirement is installation and use in the factory for manufacturing activity, not that the goods must themselves be raw material or an input directly consumed in the manufacture. The records showed that the air drier was installed in the factory and used for manufacturing operations by controlling the temperature and moisture conditions. It also fell within the machinery covered by Clause (3) of the Eighth Schedule.

Conclusion: The air drier satisfied the statutory conditions for concessional treatment and was eligible for tax at 3%.

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