Goods must be consumed in manufacture to attract tax liability under relevant provision.

1. All these three cases raise the question relating to liability to tax under S.7 - A of the Tamil Nadu General Sales Tax Act, 1959 . In these cases, the dealer buys raw bones. The raw bones are converted into crushed bones. The process is done through breaking the bones in a disintegrator. In the process of breaking the bones into pieces of 3/8" and 5/8" bones, bone grist, bone - meal, fluff horns and hoof are obtained. Roughly 50 per cent of raw bone is obtained as crushed bone; 15 per cent of raw bone is obtained as bone grist; about 15 per cent is obtained as bone - meal; about 10 per cent is obtained as fluff; about 5 per cent is obtained as horn hoof. The rest becomes waste. The dealers in T.C. No. 337 of 1979 exported crushed bone, but all the three dealers sold bone - meal, bone grist, fluff and horn hoof locally. As far as export is concerned, the Tribunal has remitted the matter back to the assessing officer in order to decide the question whether those sales fall within the scope of S.7 - A(1)(b) or 7 - A(1)(c) of the , and whether the purchase tax is payable with reference thereto. With regard to the others, namely, bone - meal, bone grist, fluff and horn hoof, etc., the Tribunal has held that S.7 - A(1)(a) will not be attracted. It is the correctness of this finding of the Tribunal with reference to S.7 - A(1)(a) that is challenged in the present tax revision cases.

2. S.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 S.3, S.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 S.3, S.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 S.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 S.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 S.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 S.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."

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

4. In State of Tamil Nadu represented by the Additional Deputy Commissioner of Commercial Taxes, Madras Division, Madras v. Associated Sales of India, Madras - 1 ( 1980 (46) STC 401 ) (T.C. No. 1190 of 1979), the scope of this provisi