Full Judgment Text
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PETITIONER:
DEPUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE (TAX
Vs.
RESPONDENT:
MIS. PADINJARKARA AGENCIES
DATE OF JUDGMENT21/01/1985
BENCH:
BHAGWATI, P.N.
BENCH:
BHAGWATI, P.N.
MISRA RANGNATH
CITATION:
1987 AIR 2244 1985 SCR (2) 851
1985 SCC (4) 237 1985 SCALE (2)1216
ACT:
Kerala General Sales Tax Act. Item 71 of First
Schedule-Liability to purchase tax as last purchase, when
arises-Rate of tax enhanced after a certain date -Goods in
stock acquired prior to such date and sold subsequently in
interest at trade of commerce Whether revised rate of tax
applicable.
HEADNOTE:
The respondent-assessee had made certain purchases
before 30th June, 1974 and sold them subsequently in the
course of inter-state trade or commerce. The rate of
purchase tax under Item 71 of the First Schedule to the
Kerala General Sales Tax was increased from 3% to 5% with
effect from 1st July, 1974. The High Court held that the
purchases made by the respondent prior to 30th June, 1974
were taxable at the rate of 3%.
Dismissing the appeal to this Court.
^
HELD: The assessee could not be made liable to tax on
the purchases made by it prior to 30th June, 1974, unless
the purchases acquired the quality of being last purchases
in the State. In the instant case there can be no doubt that
the assessee became liable to pay tax on the purchases made
by it prior to 30th June, 1974, as soon as it became
determined though subsequent to 30th June, 1974, that these
purchases were last purchases inside the State and were
conse- quently exigible to tax. Since the purchases took
place before 30th June, 1974, the assessee would be liable
to be taxed at the rate of 3% which was prevailing at the
time when the purchases were made. [1075E; G-H; 1076B]
State of Madras v. Shri T. Narayanaswami Naidu and Anr,
(1967) 3 S.C.R. 622, referred to.
Seaso Rubbers v. State of Kerala, 48 S.T,C. 256
approved.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4160 of
1985
From the Judgment and Order dated 25. 6. 1984 of
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the Kerala High Court in T. R. C. No. 19 of 1984.
1075
V. J. Francis for the Appellant. A
R.M. Ansari ,Markose Vellpally and D. N. Misra, for the
Respondent,
The Judgment of the Court was delivered by
BHAGWATI, J. The sole question which arises for
determination in this appeal is as to what is the rate at
which the goods which had been purchased earlier and which
were in stock with the assessee on 30-6-74 were assessable
to purchase tax when the purchases were found to be last
purchases as a result of events which took place subsequent
to 30. 6. 1974 This question has become C material since the
rate of purchase tax was increased from 3% to 5% with effect
from 1st July, 1974. Now it is not disputed in the present
case that the purchases of goods effected by the assessee
prior to 30-6-74 were last purchases within the State
because the goods purchased which were in stock on 30-6-74
were subsequently sold by the assessee in the course of
inter-state trade or commerce Which means that they were not
sold within the State and hence the assessee was clearly the
last purchaser within the State and as such was liable to
pay purchase tax under Item 71 of the First Schedule to the
Kerala General Sales Tax Act. Equally it is clear that the
assessee could not be made liable to tax on the purchases
made by it prior to 30th June 1974, unless s the purchases
acquired the quality of being last purchases in the State.
It was pointed out by this Court in State of Madras v. Shri
T. Naral anaswami Naidu & Anr. [1967] 3 S. C. R. 622 when
the assessee ’ files a return and declares the stock in
hand, the stock in hand cannot be said to have been ac-
quired by last purchase because he may still during the next
assessment year, sell it or he may consume it himself or the
goods may be destroyed, etc. He would be entitled to claim
before the assessing authorities that the character of
acquisition of the stock in hand was undetermined; in the
light of subsequent vents it may or may not become the last
purchase inside the State." There can therefore be no doubt
that the assessee in the present case became liable to pay
tax on the purchases made by it prior to 30th June, 1974, as
soon as it became determined though subsequent to 30th June
1974, that these purchases were last purchases inside the
State and were consequently exigible to tax.
But the question remains as to what is the rate at
which
1076
the assessee was liable to be taxed in respect of these
purchases. Since the purchases took place before 30th June
1974, the assessee would, in our opinion, liable to be taxed
at the rate prevailing at the time when the purchases were
made and since the rate at that time was 3% of the sale
price, the High Court was right in taking the view that the
purchases made by the assessee prior to 30th June 1974 were
taxable at the rate of 3%. We may point out that a similar
view has been taken by the Kerala High Court in Seaso
Rubbers v. State of Kerala, 48 S. T. C. 256. We find
ourselves in agreement with the reasoning adopted by the
Full Bench of the High Court in that case.
We accordingly reject the appeal but with no order as
to costs.
Appeal dismissed.
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