ISMAIL, C.J.

All these three cases raise the question relating to liability to tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959

Section 7-A of the Tamil Nadu General Sales Tax Act, 1959, hereinafter referred to as the Act, reads as follows :

"Levy of purchase tax. - (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person, any goods (the sale or purchase of which is liable to tax under this Act) in circumstances in which no tax is payable under section 3, 4 or 5, as the case may be, and either,(a) consumes such goods in the manufacture of other goods for sale or otherwise; or

(b) disposes of such goods in any manner other than by way of sale in the State; or

(c) dispatches 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 pay tax on the turnover relating to the purchase aforesaid at the rate mentioned in section 3, 4 or 5, as the case may be, whatever be the quantum of such turnover in a year :

Provided that a dealer (other than a casual trader or agent of a non-resident dealer) purchasing goods [the sale of which is liable to tax under sub-section (1) of section 3] shall not be liable to pay tax under this sub-section, if his total turnover for a year is less than fifty thousand rupees.

(2) Notwithstanding anything contained in sub-section (1), the provisions of section 7 shall apply to a dealer referred to in sub-section (1) who purchases goods [the sale of which is liable to tax under sub-section (1) of section 3] and whose total turnover for a year is not less than fifty thousand rupees but not more than one lakh of rupees; and such a dealer may, at his option, instead of paying the tax in accordance with the provisions of sub-section (1), pay tax at the rates mentioned in sub-section (1) of section 7.

(3) Every dealer liable to pay purchase tax under sub-section (1), shall for the purposes of this Act, be deemed to be a registered dealer." *

Consequently, for the purpose of section 7-A(1)(a) to apply, the goods purchased should have been consumed in the manufacture of other goods for sale or otherwise.

In State of Tamil Nadu represented by the Additional Deputy Commissioner of Commercial Taxes, Madras Division, Madras v. Associated Sales of India, Madras-1 (T.C. No. 1190 of 1979), the scope of this provision came to be considered by this Court. By the judgment dated 11th December, 1979, this Court held as follows :

"The assessee in this case purchased folded clips from unregistered persons and those folded clips were used in the manufactured of office files. The question for consideration is whether the assessee was liable to pay tax on the purchase turnover under section 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 manufactured of office files, the purchase turnover does not attract tax under section 7-A of the Act." *

The section came up for consideration again before this Court in T.C. No. 1183 of 1979 (State of Tamil Nadu represented by the Deputy Commissioner (C.T.), Salem v. K. Narayanaswamy Chetty and Sons). By judgment dated 11th December, 1979, this Court held as follows :

"In t