S VISWANATHAN Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE assessee is the appellant herein. THE assessee is a dealer in cable drums at Salem. On checking the accounts in the assessment year 1980-81, the assessing officer noticed that there was no evidence to prove that the wood purchased for Rs. 79, 796 had already been taxed and such purchases were consumed in the manufacture of cable drums. Hence, he determined the taxable turnover at Rs. 79, 796 and levied tax at 4 per cent. Aggrieved with the same, the assessee filed an appeal before the Appellate Assistant Commissioner (Commercial Taxes) disputing the assessment made under section7-A of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act") of the turnover of Rs. 79, 796. THE Appellate Assistant Commissioner (Commercial Taxes) was of the view that the wood, bolts and nuts had not lost their identity while they were used in the manufacture of cable drums. Accordingly, the Appellate Assistant Commissioner deleted the addition of Rs. 79, 796. THE order of the Appellate Assistant Commissioner was examined with the connected records by the Joint Commissioner. He considered that the orders of the assessing officer and the Appellate Assistant Commissioner (Commercial Taxes) were not correct. According to the Joint Commissioner, the purchase turnover of Rs. 79, 755.50 is taxable at 5 per cent. single point instead of 4 per cent. adopted by the assessing officer. Aggrieved with that order, the assessee is in appeal before this Court.

(2.) LEARNED counsel appearing for the assessee submitted that the assessment cannot be made by the assessing officer on the purchase turnover of wood under section7-A of the Act. LEARNED counsel also contended that the wood was not consumed in the manufacture of the cable drums. The planks from the wood are intact in the cable drums manufactured by the assessee/appellant and the physical existence was not lost and therefore, assessment under section 7-A on the purchase turnover of wood amounting to Rs. 79, 756 is not sustainable.

(3.) THE assessee purchased wood for Rs. 79, 756 during the year of assessment and from the wood purchased from non-dealers, the assessee had made out cable drums and in the process of making the cable drums, the identity of the wood was not lost. In order to attract the levy of tax under section 7-A the goods purchased should have been consumed or devoured or exhausted in the process of manufacturing with the result the identity of the goods has been completely lost and so long as the identity of the goods remain, the same, the goods purchased and used in the manufacture of some other goods would not be said to have been consumed in the process of manufacture of other goods.