Case: E. J. Mathew Vs. State of Kerala

2. The assessee, who is the appellant, was a dealer in tobacco at Trivandrum in the erstwhile State ofduring the years mentioned above. He made purchases of tobacco from dealers outside that State. The assessing authority as also the Appellate Assistant Commissioner of Sales Tax held that the assessee was liable to be taxed under section 3(2) of the Act because the sales made to him by thedealers were not covered by the explanation to article 286(1)(a) of the Constitution as it stood before the passing of the Constitution (Sixth Amendment) Act, 1956. The assessee filed appeals before the Sales Tax Appellate Tribunal. The Tribunal agreed with the view of the departmental authorities that the assessee was liable to pay the tax and dismissed the appeals. The assessee filed tax revision petitions before the High Court of Kerala which were also dismissed. Thereafter the assessee sought special leave under article 136 of the Constitution which was granted.

Court's reasoning:
6. It is not necessary to discuss whether the above view expressed by the High Court is correct or not because we are of the opinion that the appellant has failed to show that thedealers or sellers from whom he had purchased tobacco could fall within the meaning of the following critical words of rule 6 : "by the person who in the State is the first dealer in such goods". No contention has been raised before us by the counsel for the appellant that rule 6 was not applicable. It has therefore only to be seen as to who would be a person who in the State would be the first dealer in such goods. It appears to us that the person to be the first dealer has to be in the State and not outside the State. This is the plain and grammatical meaning which can be attributed to the words "by the person who in the State is the first dealer in such goods" and we have not been persuaded to depart from the normal canons of interpretation by giving any other meaning to these words. We also find it difficult to accede to the submission that the fiction under the explanation to article 286(1)(a) which determines the situs of a sale should be extended to "dealer" as given in the Act.Our attention was drawn by counsel for the appellant to a decision of this court in V. O. Vakkan & Others v. The State of Madras ([1955] 6 S.T.C. 647) in which it was found that a person who was residing outside the State of Madras was a "dealer" within the definition of the term in the Madras General Sales Tax Act. This finding, however, was based on the peculiar facts of that case inasmuch as thedealer had entered into most of the contracts with firms in Fort Cochin which was part of the Madras State and the goods were deliverable and actually delivered to the purchaser in that place. No such contention appears to have been advanced, in the present case, at any stage and for that reason no finding could be given by the departmental authorities about the magnitude of the transactions or contracts made by those dealers with persons in the erstwhile State ofThe appellant can hardly derive any assistance from the aforesaid decision of this court.