The State of Tamil Nadu vs Associated Sales of India

M.M. Ismail, C.J.—The assessee in this case purchased folded clips from unregistered persons and those folded clips were used in the

manufacture of office files. The question for consideration is whether the assessee was liable to pay tax on the purchase turnover u/s 7-A of the

Tamil Nadu General Sales Tax Act, 1959. Because the assessee purchased folded clips from unregistered persons, the purchase was not liable to

tax. The only other point is whether the case can be brought under the scope of Section 7-A of the Act. One of the requirements of Section 7-A is

that the goods so purchased should be consumed in the manufacture of other goods for sale or otherwise. No doubt in this case office files were

manufactured by the dealer. But in that manufacture, the folded clips were not consumed but were merely used or utilised. The language used in the

section is ""consumes such goods in the manufacture of other goods"" and not ""uses such goods in the manufacture of other goods"". Consequently,

we agree with the conclusion of the Tribunal and hold that since the folded clips were not consumed in the manufacture of office files, the purchase

turnover does not attract tax u/s 7-A of the Act. The tax revision case is, therefore, dismissed.