Case: State of Kerala Vs. Pothen Joseph and Sons

2. The assessee had been registered as dealer under the Central Sales Tax act, 1956 (74 of 1956), hereinafter called the Act. In respect of the yearthe assessee claimed a deduction on account of excise duty paid amounting to Rs. 2, 17, 744.20. The assessee also sought a deduction of commission amounting to Rs. 50, 047.66. It further claimed that calculation of Central sales tax at 7% on the turnover of Rs. 27, 382.01 was not correct. The departmental authorities as also the Appellate Tribunal decided against the assessee on all the aforesaid matters. The High Court held that in view of the ratio of the decision of this court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons ([1965] 16 S.T.C. 231) the turnover represented by the excise duty was liable to be deducted. As regards the matter relating to discount or commission, it was conceded that the decision on the first point must govern that point as well. Counsel on behalf of the department conceded on the third point that the C Form produced would be sufficient to grant the exemption claimed and that tax could be imposed only at the rate of 1% in relation to the turnover covered by the C Form. The High Court therefore allowed the revision petition and directed that such modifications as were necessary should be made in the assessment.

Reasoning: The Madras High Court in S. Mariappa Nadar v. State Madras ([1962] 13 S.T.C. 371) had gone elaborately into the question of the applicability of the general sales tax law of the State in such circumstances and had held that the phrase "in the same manner" in section 9(3) did not make applicable all the incidents of the local sales tax law to the assessment under the Act and what was contemplated was that the procedure of making an assessment, collection of tax etc. should be the same as laid down in the general sales tax law. In other words, according to the Madras High Court it was only the machinery of the procedural provisions of the local law which was made applicable by section 9(3) of the Act. In the decision of this court, in the majority judgment, no reference was made to the Madras decision but in the minority judgment the Madras case was discussed. In these circumstances it would be legitimate to conclude that although Mariappa Nadars case ([1962] 13 S.T.C. 371) was cited before this court but in the majority judgment a different view was taken. As we are bound to follow the majority judgment we find no escape from the conclusion, after applying the ratio therein, that the general sales tax law of the State which would include the rules framed thereunder governed the levy and assessment of the tax in the matter ofral has greatly stressed the conflict which may arise if we follow the view expressed in the majority judgment; for instance, it is pointed out that if in the rules it is expressly provided that no deduction would be permissible on account of payment of excise duty whereas such a deduction is allowable under the rules framed under the general sales tax law of the State, a question would immediately arise which enactment or set of rules is to prevail. If and when such a situation arises, the matter can be considered but for the purpose of the present case we are satisfied that the decision of the majority of this court in the aforesaid case would govern the determination of the question which was resolved in favour of the assessee by the High Court.