IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 10.09.2004 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARAN AND THE HON'BLE MR.JUSTICE K.RAVIRAJA PANDIAN W.P.NO.25081 OF 2002 AND W.P.M.P.NO.34438 OF 2002 Mohan Breweries and Distilleries Limited No.112, M.M.Nagar, Valasaravakkam Chennai – 600 087. ... Petitioner Vs. 1. The Commercial Tax Officer Porur Assessment circle No.3, Arcot Road, Alwarthirunagar Chennai – 600 087 2. The Principal Commissioner and Commissioner of Commercial Taxes Department of Commercial Taxes Government of Tamil Nadu Ezhilagam Chepauk Chennai – 600 005 3. The Tamil Nadu Taxation Special Tribunal, represented by its Registrar, Second Floor Singaravelar Maaligai Chennai – 600 001. .. Respondents Prayer: Writ Petition filed under Article 226 of the Constitution of India for the relief of issuance of a writ of certiorarified mandamus quashing the proceedings of R3 in OP No.476/02 dt.26.6.2002 confirming the orders of R1 in TNGST 1380110/96-97 dt.27.3.02 while directing the R1 to pass fresh orders giving effect to the circulars of D.Dis.Acts. Cell.I/105980/88 dt. 9.11.89 and D.Dis.Acts.Cell.II/ 52900/2000 dt.27.12.2000 of R2. For Petitioner : Mr.C.Natarajan,Sr.Counsel for Mr.N.Inbarajan https://hcservices.ecourts.gov.in/hcservices/ For Respondents: Mr.T.Ayyasamy,Spl.Govt. Pleader (Taxes) for RR1 and 2. ORDER (Order of the Court was made by P.D.DINAKARAN, J,.) I – ISSUES: The questions that arise for our consideration in this writ petition are: (i) Whether the purchase turnover of empty bottles purchased by the petitioner Company, who are engaged in the business of manufacturing Beer and IMFL products, from unregistered dealers for bottling Beer and IMFL manufactured by them, through the bought note to the extent of Rs.24,78,20,465.00 is attracted for purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act (for brevity "the Act')?; (ii) Whether purchase tax is leviable on the purchase turnover of the empty bottles purchased by the petitioner Company to the extent of Rs.24,78,20,465.00, under Section 7-A of the Act, in spite of the clarifications dated 9.11.1989 and 27.12.2000 issued in favour of the petitioner Company by the Special Commissioner and Commissioner of Commercial Taxes, Chennai, in view of Section 28A of the Act?; and (iii) Whether cash discount on the price offered by the petitioner Company to the TASMAC is taxable in view of explanation 2(iii) to Section 2(r) of the Act?. II - RELEVANT FACTS: 2.1. The brief facts of the case, so far as they are relevant for the disposal of this petition are: The petitioner is a Company incorporated under the Companies Act. They are engaged in the business of manufacture of beer and IMFL products in their factory located at No.7, Selva Street, M.M.Nagar, Valasaravakkam, Chennai – 600 087. 2.2. The petitioner Company was finally assessed on a total and taxable turnover of Rs.2,52,33,32,932.00 and Rs.2,49,65,22,854.00 respectively by an assessment order dated 21.10.1998 for the assessment year 1996-97 under the Act. 2.3. The petitioner effected the purchase of empty bottles as https://hcservices.ecourts.gov.in/hcservices/ shown below: Transfer of bottles from Pondicherry Captive Consumption – Against Form 'F' 8,23,96,234.00 Purchase of bottles from other State – Against Form 'C' 85,93,510.00 Purchases of bottles – Bought Note through Salesmen permits 24,78,20,465.00 Total 33,88,10,209.00 2.4. The first respondent/assessing authority, by a notice dated 30.4.1999, proposed to levy purchase tax under Section 7-A of the Act on the purchase of empty bottles effected from unregistered dealers under bought note through salesmen permits, viz., on a sum of Rs.24,78,20,465.00, at the rate of 16%, with surcharge and additional surcharge; and additional tax that would be levied in the above taxable turnover at the rate of 2.50%, and called for objections from the petitioner. 2.5. In response to the said notice dated 30.4.1999, the petitioner/Company submitted their objections on 27.9.1999 to the effect that the purchase of empty bottles for packing Beer and IMFL products are not attracted under Section 7-A of the Act for levy of purchase tax and in any event, the same is illegal and unjustified in view of the clarification issued by the Special Commissioner and Commissioner of Commercial Taxes dated 9.11.1989, inasmuch as such clarification is binding on the assessing authorities as per Section 28-A of the Act. The petitioner also placed reliance on the proceedings of the Appellate Assistant Commissioner (CT), Chennai with respect to the assessment years 1986-87, 1987-88 and 1988-89 holding that imposition of purchase tax on the purchase of empty bottles is illegal and unjustified. 2.6. Before passing final orders on the objections made by the petitioner dated 27.9.1999 to the notice dated 30.4.1999, the Principal Commissioner and Commissioner of Commercial Taxes, Chennai in his proceedings dated 27.12.2000 further clarified that the purchase of empty bottles during the assessment years 1991-92, 1993- 94, 1994-95 and 1995-96 could not be made liable to be charged under Section 7-A of the Act to levy purchase tax, as the clarification dated 9.11.1989 was still in force and the same would also apply for the assessment years 1991-92, 1993-94, 1994-95 and 1995-96. 2.7. However, the Special Commissioner and Commissioner of Commercial Tax, in his proceedings dated 28.1.2002, clarified that the https://hcservices.ecourts.gov.in/hcservices/ purchase of empty bottles from unregistered dealers used for packing of Beer and IMFL products is liable to tax under Section 7-A of the Act. 2.8. That apart, the Assessing Authority, by notice dated 5.2.2002, proposed to revise the assessment notice dated 29.10.1998 for the assessment year 1996-97 by disallowing the exemption on cash discount allowed by the petitioner to TASMAC; to levy tax on the said cash discount; to levy surcharge and additional surcharge at the rate of 15% and 5% respectively; and additional sales tax. 2.9. In response to the notice dated 5.2.2002, the petitioner Company, by their letter dated 18.3.2002, placing reliance on explanation 2(iii) to Section 2(r) of the Act submitted that any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover. 2.10. On receipt of the objection dated 27.9.1999 submitted to the notice dated 30.4.1999 and the further objection dated 18.3.2002 to the notice dated 5.2.2002, the assessing authority passed a revised order on 27.3.2002 levying purchase tax on the purchase turnover for the purchase of empty bottles from unregistered dealers under Section 7-A of the Act at the rate of 16%, and also levying surcharge and additional surcharge, as well as additional sales tax, as follows: "... The assessment already made under the TNGST Act'59 for the year 1996-97 vide this office proceedings in TNGST-1380110/96- 97, dated 29.10.1998 is revised under Section 16(1)(a) of the TNGST Act'59 and the total and taxable turnover of the dealers for the year 1996-97 under the TNGST Act'59 is refixed and assessed to tax as detailed below: 1 Taxable turnover already determined and assessed to tax at the various rate of tax as per order in TNGST- 1380110/96-97 dated 29.10.1998 i) 1.4.96 to 16.7.96 ii) from 17.7.96 to 31.3.97 = = Rs. 73,86,65,644.00 Rs. 1,75,78,57,210.00 2 Add purchases of empty bottles from un-registered dealers brought to assessment and assessed to tax @ 16% u/s7-A of the TNGST Act-1959 = Rs. 24,78,20,465.00 https://hcservices.ecourts.gov.in/hcservices/ 3 ADD: Exemption allowed already on cash discount allowed to TASMAC is disallowed and brought to assessment and assessed to tax @ i) 25% from 1.4.96 to 16.7.96 ii) 30% from 17.7.96 to 31.3.97 = = Rs. 59,66,788.00 Rs. 1,68,22,630.00 4 Taxable turnover redetermined Rs. 276,71,32,787.00 5 Add exemption allowed already in the assessment order in TNGST.1380110/96- 97 dated 29.10.98 excluding the cash discount allowed to TASMAC which is now brought to assessment in Col.3 above = Rs. 40,20,660.00 6 Total Turnover re-determined Rs. 277,11,53,447.00 i) Tax due at the various rates to the taxable turnover already assessed (ii) Tax due @ 16% on Rs.24,78,20,465.00 (iii) Tax due @ 25% on Rs.59,66,788.00 (iv) Tax due @ 30% on Rs.1,68,22,630.00 = = = = Rs. 70,91,55,015.00 Rs. 3,96,51,274.00 Rs. 14,91,697.00 Rs. 50,46,789.00 Total tax Due Rs. 75,53,44,775.00 Tax paid which includes the refund of excess penalty ordered in this order Rs.68,36,825.00 = Rs. 71,59,91,840.00 Balance due Rs. 3,93,52,935.00 A Demand notice in Form 'B3' is issued. 1 Surcharge due @ 15% on the tax due of Rs.18,41,34,126.00 already levied in the Assessment order in TNGST No.1380110/96-97, dated 29.10.1998 except tax due on the sale of M.S.Scraps = Rs. 2,76,20,119.00 https://hcservices.ecourts.gov.in/hcservices/ 2 Surcharge due @ 15% on the tax due of Rs.14,91,697.00 on the turnover now determined upto 16.7.1996 = Rs. 2,23,755.00 3 Total Surcharge due Rs. 2,78,43,874.00 4 Total Surcharge paid Rs. 2,76,20,119.00 Balance Rs. 2,23,755.00 A demand notice in Form 'U' is issued for surcharge balance. 1 Additional Surcharge due @ 5% on the tax due of Rs.184134126.00 except tax due on the sale of M.S.Scrap already levied in the assessment order in TNGST No.1380110/96-97, dated 29.10.1998 = Rs. 92,04,717.00 2 ASC due @ 5% on the tax due of Rs.14,91,697.00 on the turnover now determined upto 16.7.1996 = Rs. 74,585.00 3 Total ASC due Rs. 92,79,302.00 4 Total ASC paid Rs. 92,04,717.00 Balance Rs.74,585.00 A demand notice in Form 'U' is issued for ASC balance. 1 Additional Sales tax due @ 2.5% on the taxable turnover of Rs.249,57,18,413.00 which excluded the sales of M.S.Scrap for Rs.8,04,441.00 already levied in the Assessment order in TNGST No.1380110/96-97, dated 29.10.1998 = Rs. 6,23,92,960.00 2 Additional Sales Tax due @ 2.5% on the taxable turnover of Rs.27,06,09,933.00 now assessed = Rs. 67,65,248.00 3 Total Addl. Sales tax due Rs. 6,91,58,208.00 4 Add Sales tax paid Rs. 6,23,92,960.00 https://hcservices.ecourts.gov.in/hcservices/ Balance Rs. 67,65,248.00 A demand notice in Form 'N3' is issued." (emphasis supplied) 2.11. Aggrieved by the said proceedings of the first respondent, the petitioner company preferred O.P.No.476 of 2002 before the Tamil Nadu Taxation Special Tribunal, Chennai seeking to quash the proceedings of the first respondent dated 27.3.2002 and to direct the first respondent to give effect to the clarifications dated 9.11.1989 and 27.12.2000. 2.12. The Tribunal, by order dated 26.6.2002, taking note of the amendment brought in vide the Tamil Nadu Act 78 of 1986 held that the ratio laid down in the decision in ASSOCIATED PHARMACEUTICAL INDUSTRIES (P) LTD. v. STATE OF TAMIL NADU, [1986] 63 STC 316 is not applicable as the same was rendered prior to the amendment of Section 7-A(1)(a) of the Act and held that the purchase turnover for the purchase of empty bottles from the unregistered dealers attracts purchase tax under Section 7-A of the Act; and that in view of the clarification dated 28.1.2002, the earlier clarifications dated 9.11.1989 and 27.12.2000 could not be relied upon and thus, refused to interfere with the order of the first respondent dated 27.3.2002. Hence, the petitioner Company has preferred this writ petition for issue of a writ of Certiorarified Mandamus to call for the records on the file of the third respondent in O.P.No.476/2002 dated 26.6.2002 confirming the orders of the first respondent in T.N.G.S.T.No.1380110/96-97 dated 27.3.2002 and quash the same, while directing the first respondent to pass fresh orders giving effect to the clarifications in D.Dis.Acts.Cell.I/105980/88 dated 9.11.1989 and D.Dis.Acts.Cell.II/52900/2000 dated 27.12.2000 of the second respondent. III - CONTENTIONS MADE ON BEHALF OF THE WRIT PETITIONER/ASSESSEE: 3.1.1. Mr.C.Natarajan, learned senior counsel for the petitioner contends that the purchase turnover to the extent of Rs.24,78,20,465.00 towards the purchase of empty bottles through bought note from the unregistered dealers cannot be charged for the purchase tax under section 7-A of the Act. 3.1.2. According to Mr.C.Natarajan, learned Senior Counsel appearing for the petitioner/Company, TASMAC is the sole purchaser of Beer and IMFL products from the petitioner in cases and the consideration is also paid only per case, viz., the consideration paid by TASMAC was not only for the Beer or IMFL products contained in the bottle, but also for the bottles themselves in which the Beer or IMFL was packed. 3.1.3. Mr.C.Natarajan, learned Senior Counsel contends that the https://hcservices.ecourts.gov.in/hcservices/ bottles which contained Beer and IMFL product are themselves sold. There are two sales involved in the transaction between the petitioner and TASMAC, viz., (i) sale of Beer and IMFL products; and (ii) sale of the bottles in which the Beer or IMFL products are packed. 3.1.4. Mr.C.Natarajan, learned senior counsel points out that the manufacturing cost of the Beer per case was worked out to Rs.109.93 per case including the cost of the bottle for packing Beer that was worked out to a sum of Rs.35.69 per case. Thus, the cost of the Beer bottle alone constituted 32% of the manufacturing cost. Similarly, the cost of manufacture of IMFL product per case was worked out to Rs.217.06 per case including the cost of the bottle to pack IMFL product that was worked out to Rs.60.46 per case and thus, the cost of IMFL bottle alone constituted 28% of the manufacturing cost. 3.1.5. It is, therefore, argued that even though the transaction of sale of Beer or IMFL products by the petitioner to TASMAC includes two sales, viz., (i) sale of Beer and IMFL products; and (ii) sale of the bottles in which the Beer or IMFL products are packed, both sales are integrated components of a single sale transaction. Therefore, the price of the bottles is always a component of the sale price of the Beer and IMFL product. When Beer and IMFL products are taxed, the value of the bottles are also taxed. Hence, Section 7-A of the Act is not applicable for the purchase of empty bottles from the unregistered dealers under bought note. 3.1.6. Mr.C.Natarajan, inviting our attention to the proceedings of the Appellate Assistant Commissioner (CT), Chennai with respect to the assessment years 1986-87, 1987-88 and 1988-89, contends that imposition of purchase tax on the purchase of empty bottles is unjustified. 3.1.7. In this regard, Mr.C.Natarajan, places reliance on the decisions in (i) THE DEPUTY COMMISJSIOENR (C.T.), COIMBATORE DIVISION, COIMBATORE – 18 v. VIJAYA TRADING COMPANY, [1980] 46 STC 400; and (ii) ASSOCIATED PHARMACEUTICAL INDUSTRIES (P) LTD. v. STATE OF TAMIL NADU, [1986] 63 STC 316, and contends that the purchase turnover of packing materials, in the instant case, the empty bottles, could not be brought to charge under Section 7-A of the Act to levy purchase tax. 3.2.1. Secondly, Mr.C.Natarajan, learned senior counsel, relying on the decision in COLLECTOR OF CENTRAL EXCISE, PATNA v. USHA MARTIN INDUSTRIES, [1998] 111 STC 254, contends that as per the rules of interpretation, when two opinions are possible, the one which is in favour of the assessee should be applied. 3.2.2. Citing the decision in THE STATE OF TAMIL NADU v. M.K.KANDASWAMI & OTHERS, [1975] 36 STC 191, wherein it was held that the main object of Section 7-A of the Act is to plug leakage and prevent evasion of tax, Mr.C.Natarajan, learned Senior counsel, https://hcservices.ecourts.gov.in/hcservices/ contends that since the petitioner had already paid tax for Beer and IMFL products as well as on the price of the containers, viz., the bottles, the main object of Section 7-A of the Act has been achieved. It is also contended that if more than one construction is possible, the one which preserves its workability and efficacy is to be preferred as against the one which would render it otiose and sterile. According to Mr.C.Natarajan, since Section 7-A of the Act is enacted to plug leakage and prevent evasion of tax, when the same is achieved by payment of tax for the sale of Beer and IMFL products as well as the containers, namely bottles, there is no reason to give a different interpretation which would otherwise prejudice the interest of the assessee. 3.2.3. Mr.C.Natarjan, learned senior counsel placing reliance on the decision in (i) HMM LIMITED & ANOTHER v. ADMINISTRATOR, BANGALORE CITY COPRN. & ANOTHER, [1989] 4 SCC 640; and (ii) MAFATLAL INDUSTRIES LTD. v. NADIAD NAGAR PALIKA & ANOTHER, [2000] 3 SCC 1, contends that bottling of the Beer and IMFL products in the bottles, for marketing them, would not, by itself, render the assessee chargeable for purchase tax under Section 7-A of the Act, inasmuch as the bottles were not used for a separate and independent purpose other than for the sale of Beer and IMFL products for which the petitioner was already assessed to sales tax. According to Mr.C.Natarajan, the insertion of the words "or uses" by way of the Tamil Nadu Act 78 of 1986 would not in any way be a good and sufficient reason to distinguish the decision in ASSOCIATED PHARMACEUTICAL INDUSTRIES PRIVATE LIMITED v. THE STATE OF TAMIL NADU, [1986] 63 STC 316. 3.3. Thirdly, Mr.C.Natarajan, learned senior counsel contends that even assuming the purchase turnover towards the purchase of empty bottles attracts Section 7-A of the Act, the respondents are bound by the clarifications dated 9.11.1989 and 27.12.2000 issued in favour of the petitioner Company as the same were in force for the impugned assessment year 1996-97, in view of Section 28-A of the Act, till the said clarifications dated 9.11.1989 and 27.12.2000 were modified by a subsequent clarification dated 28.1.2002, which, could be given effect to only prospectively, viz., from the date of the clarification, viz., 28.1.2002. In this connection, Mr.C.Natarajan, learned senior counsel relies on the following decisions: (i) STATE BANK OF TRAVANCORE v. C.I.T., [1986] 158 ITR 102; (ii) KESHAVJI RAVJI & CO. v. COMMISSIONER OF INCOME TAX, [1990] 183 ITR 1; (iii) COLLECTOR OR CENTRAL EXCISE, PATNA v. USHA MARTIN INDUSTRIES, [1998] 111 STC 254; (iv) PAPER PRODUCTS LTD. v. COMMISSIONER OF CENTRAL EXCISE, [1999] 112 ELT 765; (v) UCO BANK v. C.I.T., [1999] 237 ITR 889; (vi) COMMISSIONER OF SALES TAX, U.P. v. INDRA INDUSTRIES, [2001] 122 STC 100; https://hcservices.ecourts.gov.in/hcservices/ (vii) COMMISSIONER OF INCOME TAX v. KELVINATOR OF INDIA LTD., [2002] 256 ITR 1; (viii) COLLECTOR OF CENTRAL EXCISE, VADODRA v. DHIREN CHEMICAL INDUSTRIES, [2002] 126 STC 122; (ix) COLLECTOR OF CENTRAL EXCISE, VADODARA v. DHIREN CHEMICAL INDUSTRIES, [2002] 143 ELT 19; and (x) COMMISSIONER OF CUSTOMS, CALCUTTA v. INDIAN OIL CORPORATION LTD., [2004] 165 ELT 257. 3.4. Lastly, Mr.C.Natarajan, learned senior counsel contends that only the amount which flows from the hands of the purchaser to the seller is taxable, but no other amount such as the cash discount, in view of explanation 2(iii) to Section 2(r) of the Act, as held by the Apex Court in NEYVELI LIGNITE CORPORATION LTD. v. THE COMMERCIAL TAX OFFICER, 124 STC 586. IV – CONTENTIONS MADE ON BEHALF OF THE RESPONDENT/REVENUE: 4.1. Per contra, Mr.T.Ayyasamy, learned Special Government Pleader appearing for the respondents contends that the decision in ASSOCIATED PHARMACEUTICAL INDUSTRIES (P) LTD. v. STATE OF TAMIL NADU, [1986] 63 STC 316, is not applicable to the facts of the case in view of the amendment brought in Section 7-A(1)(a) of the Act whereunder the words "or uses" were inserted by the Tamil Nadu Act 78 of 1986. 4.2. By an amendment brought under the Tamil Nadu Act 78 of 1986 inserting the words "or uses" in Section 7-A(1)(a) of the Act, the legislature has expressly and unambiguously made it clear that the purchase turnover towards purchase of goods in the manufacture of other goods for sale or otherwise are chargeable for purchase tax, giving no room for two opinions one for levy of tax and the other for the benefit of the assessee. In this regard, Mr.T.Ayyasamy, learned Special Government Pleader relies on the decision in ASSISTANT COMMISSIONER (INTELLIGENCE) v. NANDANAM CONSTRUCTION COMPANY, [1999] 115 STC 427, whereunder the Apex Court dealt with Section 6-A(ii)(a) of the Andhra Pradesh General Sales Tax Act, which is pari materia to Section 7-A(1)(a) of the Tamil Nadu General Sales Tax Act. 4.3. Placing reliance on the decision in JAYAM TRADERS v. TAMIL NADU TAXN. SPL. TRIBUNAL [2004] 136 STC 302, it is contended that though the clarifications dated 9.11.1989 and 27.12.2000 may be binding on the revenue, they would not be binding on the assessee in cases where it is adverse to him and in which case, it is for the Court to decide whether the stand of the assessee is right and in accordance with the provisions of the Act. 4.4. According to Mr.T.Ayyasamy, learned Special Government Pleader the earlier clarifications dated 9.11.1989 and 27.12.2000 of the Special Commissioner and Commissioner of Commercial Taxes stand modified by issuance of the clarification dated 28.1.2002 and the https://hcservices.ecourts.gov.in/hcservices/ correctness of the clarification dated 28.1.2002 cannot be gone into by this Court, unless the same is challenged by the assessee in appropriate legal proceedings. In this regard, the learned Special Government Pleader places reliance on the decision in AMUL PLOYCURE INDUSTRIES LTD. v. TAMIL NADU TAXATION SPECIAL TRIBUNAL & OTHERS, [2004] 134 STC 526. 4.5. Finally, Mr.Ayyasamy, learned Special Government Pleader contends that the cash discount allowed is nothing but a commission availed for early payment by TASMAC to the petitioner and therefore, the same is liable to be taxed. V – CONSIDERATION AND FINDINGS: 5. We have given careful consideration to the submissions of both sides. 6. From the above rival contentions made on behalf of the assessee and the revenue, the following questions arise for our consideration: (i) Whether the purchase turnover of empty bottles purchased by the petitioner Company, who are engaged in the business of manufacturing Beer and IMFL products, from unregistered dealers for bottling Beer and IMFL manufactured by them, through the bought note to the extent of Rs.24,78,20,465.00 is attracted for purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act (for brevity "the Act')?; (ii) Whether purchase tax is leviable on the purchase turnover of the empty bottles purchased by the petitioner Company to the extent of Rs.24,78,20,465.00, under Section 7-A of the Act, in spite of the clarifications dated 9.11.1989 and 27.12.2000 issued in favour of the petitioner Company by the Special Commissioner and Commissioner of Commercial Taxes, Chennai, in view of Section 28A of the Act?; and (iii) Whether cash discount on the price offered by the petitioner Company to the TASMAC is taxable in view of explanation 2(iii) to Section 2(r) of the Act?. 7.1. Question: (i) - Whether the purchase turnover of empty bottles purchased by the petitioner Company, who are engaged in the business of manufacturing Beer and IMFL products, from unregistered dealers for bottling Beer and IMFL manufactured by them, through the bought note to the extent of Rs.24,78,20,465.00 is attracted for purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act (for brevity "the Act')? 7.2. In this regard it is apt to refer Section 7-A(1)(a) of the https://hcservices.ecourts.gov.in/hcservices/ Act before and after the amendment brought vide Tamil Nadu Act 78 of 1986, which came into effect from 1.1.1987. Before Amendment: "Section 7-A: 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 sections 3, 4, or 5, as the case may be, 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) 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 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 one lakh of 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)