Intra-State sale for manufacture qualified for concessional tax; later movement of a distinct product did not convert the sale into inter-State trade.

Goods sold and delivered within Tamil Nadu for use in manufacture there qualified for concessional tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. The court treated the sale of LAB against Form XVII as complete on delivery at Ranipet, since the buyer had an additional place of business and a job-work arrangement in the State. The later movement of the manufactured product, Acid Slurry, to Mangalore did not alter the character of the original transaction, because that product was commercially distinct and moved independently of the sale. The original sale was therefore intra-State and eligible for the statutory concession.

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Issues: Whether the petitioner was entitled to concessional tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 on the sale of LAB against Form XVII, and whether the transaction was an intra-State sale rather than an inter-State sale.

Analysis: The goods were delivered at Ranipet pursuant to the purchase order, and the buyer had an additional place of business and job-work arrangement in Tamil Nadu. The LAB sold by the petitioner was consumed in manufacture at Ranipet, and the product moved thereafter was Acid Slurry, a commercially distinct product. On the admitted facts, the contract of sale stood completed within Tamil Nadu on delivery, and the later movement of the manufactured product to Mangalore was independent of the sale. The statutory requirement under section 3(3) was therefore satisfied, as the sale was to another dealer for use in manufacture inside the State for sale.

Conclusion: The petitioner was entitled to the concessional rate and Form XVII could not be used on the ground that the transaction was inter-State.

Final Conclusion: The clarification impugned in the writ petition was unsustainable, and the petitioner succeeded in establishing that the sale was within the State and eligible for the statutory concession.

Ratio Decidendi: Where goods are sold and delivered within the State to be used in manufacture there, the later movement of the manufactured, commercially distinct product to another State does not convert the original sale into an inter-State sale for the purpose of concessional tax under section 3(3).

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