TMI Blog1982 (4) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... and converting the same into rice and selling it. 3.. Section 6 of the "Act" reads as follows: "6. Levy of Purchase tax under certain circumstances.-Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods and, (i) either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State, or (ii) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following acts with reference to such goods: (i) consumes the goods in the manufacture of other goods for sale; (ii) consumes the goods otherwise than in the process of manufacture; (iii) disposes of the goods otherwise than by sale in the State; (iv) despatches the goods outside the State otherwise than in the course of inter-State trade or commerce." 5.. In these cases, the petitioner had purchased paddy and manufactured rice out of it for purposes of sale. Therefore, under the impugned orders he is called upon to pay tax under section 6 of the "Act" on the purchase price of paddy. 6.. Sri B.V. Katageri, the learned counsel for the petitioner, contends as follows: The power to levy excise duty is exclusively vested in the Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not on mere manufacture of goods. For instance, if a person were to purchase goods not in the course of his business even under circumstances under which no tax was leviable under section 5 of the "Act" and manufactured goods out of them for his own consumption and not for sale, he would not become liable to pay tax under the said section. Therefore, the levy under section 6 of the "Act" cannot be construed as being of the nature of excise duty as contended for the petitioners. As the levy, as held in Cheyyabba's case [1980] 45 STC 1, is in the nature of tax on sale or purchase, as the case may be, and in respect of transactions carried on by a dealer in the course of business, the levy is perfectly within the legislative competence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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