Full Judgment Text
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PETITIONER:
DY. COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE (TAXES
Vs.
RESPONDENT:
PADINJARAKARA 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
inter-state trade or 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
subsequently eligible 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. [8S2F-H; 853B]
State of Madras v. T. Narayanaswami Naidu & 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.
852
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From the Judgment and Order dated 25.6.1984 of the
Kerala High Court in T.R.C. No. 19 of 1984.
V. J. Francis for the Appellant.
T. M. Ansari, Markose Vellapally 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 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 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. Narayanaswami Naidu & Anr.(1) when the assessee "files a
return and declares the stock in hand, the stock in hand
cannot be said to have been acquired 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 undermined; in the light of subsequent
events 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.
(1) [1967] 3 S.C.R. 622.
853
But the question remains as to what is the rate at
which the A 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 the 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(1). 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.
M.L.A. Appeal dismissed
(1) 38 S.T.C. 256
854
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