(1) Every dealer who in the course of his business purchases any goods specified in Schedule II from any person other than a registered dealer or from a registered dealer who has opted for composition of tax under Section 11 or from a registered dealer in the circumstance in which no tax under Section 9 is payable by the registered dealer on the sale price of such goods, shall be liable to pay tax on the purchase price of such goods if after their purchase,-

(a) the goods other than those specified in Part III and Part III A of the said Schedule, are not sold within the State of Madhya Pradesh or in the course of inter-State trade or commerce or in the course of export out of the territory of India but are sold or disposed of otherwise; or

(b) the goods other than those specified in Part III and Part III A of the said Schedule, are consumed or used,-

(i) in the manufacture or processing of goods declared tax free under section 16 other than the goods notified under sub-section (1B) of Section 14 and the manufactured or processed goods are disposed of otherwise than by way of sale in the course of export out of the territory of India; or

(ii) as plant, machinery, equipment and parts thereof in generation, transmission or distribution of electrical energy; or

(c) the goods other than those specified in Part III and Part III A of the said Schedule, after consumption or use in the manufacture or processing or mining of any goods specified in Schedule II or the goods notified under sub-section (1B) of Section 14, the manufactured or processed or mined goods are disposed off otherwise than by way of sale within the State of Madhya Pradesh or in the course of inter-State trade or commerce or in the course of export out of the territory of India; or

(d) the goods specified in Part III and Part III A of the said Schedule, are not sold within the State of Madhya Pradesh or in the course of inter-State trade or commerce or in the course of export out of the territory of India but are sold or disposed of otherwise; or

(e) the goods specified in Part III and Part III A of the said Schedule, are consumed or used in the manufacture or processing or mining of goods;

and such tax shall be levied,-

(i) in respect of goods referred to in clauses (a), (b) and (c), at the rate of 5 percent or the rate specified in column (3) of Schedule II, whichever is lower; and

(ii) in respect of goods referred to in clauses (d) and (e), at the rate specified in column (3) of Schedule II.

Explanation - The rate specified in Schedule II shall be the rate at which tax would have been levied on the sales of such goods within the State of Madhya Pradesh on the date of such purchase:

Provided that in respect of the goods referred to in clause (b) consumed in manufacture or processing of goods specified in Schedule I notified under second proviso to clause (a) of subsection (1) of section 14 and the goods so manufactured or processed are disposed off otherwise than by way of sale in the course of export out of the territory of India, such tax shall be levied at the rate of 2 percent:

Provided further that in respect of the goods referred to in clause (c) consumed in manufacture of goods specified in Schedule II notified under first proviso to clause (a) of sub-section (1) of section 14 and the goods so manufactured are disposed off otherwise than by way of sale within the State of Madhya Pradesh or in the course of inter-state trade or commerce or in the course of export out of the territory of India, such tax shall be levied at the rate of 2 percent.

(2) No tax under this Section shall be levied in respect of any year on-

(a) a dealer whose turnover in a year does not exceed the limit prescribed under sub-section (2) of Section 5;

(b) any other dealer who has no turnover, if his aggregate of purchase prices of all the goods does not exceed such amount as may be prescribed.

(3) Every dealer who has no turnover and is liable to pay tax under sub-section (1) shall, for the purpose of Sections 18, 20, 21, 24, 25 and 39 be deemed to be a registered dealer.