1983 (6) TMI 168 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of the term "consumes" in section 7-A of the Tamil Nadu General Sales Tax Act, 1959 in the context of the purchase of timber for manufacturing packing cases.

Analysis:
The judgment in question pertains to a tax revision case where the assessee, a manufacturer of packing cases, challenged the application of section 7-A of the Tamil Nadu General Sales Tax Act, 1959 to their purchase of timber for manufacturing packing cases. The Tribunal had previously held that the purchases of timber were for consumption in the manufacture of packing cases, thus attracting section 7-A. The assessee contended that the term "consumes" should not be equated to "uses" and that there was no actual consumption of wood in the manufacturing process.

Upon review, the court found that the Tribunal had correctly applied section 7-A. The court addressed the argument of the assessee's counsel, who sought to restrict the meaning of "consumes" to imply devouring, citing a previous decision. The court highlighted that once the timber is used in the manufacturing process and transformed into packing cases, its identity as timber is lost permanently. The court emphasized that the process of manufacturing packing cases does amount to consumption of timber, even if interpreted as devouring, as the timber is no longer recognizable as such after the transformation.

The court further referenced the earlier decision cited by the assessee, which established that once the identity of goods is lost in the manufacturing process, they are deemed to be consumed in the manufacture. Therefore, the court concluded that in the present case, there was indeed consumption of timber in the manufacture of packing cases, justifying the application of section 7-A. Consequently, the tax case was dismissed, upholding the Tribunal's decision.