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DEPUTY COMMISSIONER OF SALES TAX (LAW)

BOARD OF REVENUE (TAXES)

M/S. PADINJARKARA AGENCIES

January .21, 1985

[P.N. BHAGWATI AND RANGANATH MISRA, JJ.]

Kerala .General Sales Tax Act, lte111 71 Of First Schedule-Liability to pur- chase tax as la_st purchase, when arises-Rate of tax enhanced aftef a certain date -Goods in Stock acquired prior to such date and sold subseque11tly in interest at trade of commerce-Whether revised rate of tax applicable. '

The respondent-assessee had made certain purchases before 30th June 1974 and sold them subsequently in the course of intef-state trade of 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 fro-m 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 purchses made by it-prior to 30th June, 1974, unless the purchases acquired the qriality of being last ptirchases in the Seate. In the 'instant case there can be no doubt tfiat the assessee became liable to pay tax.: on the purchases made by it prior to 30th June, 1974, 3s soon as it becan1e determined though subsequent to 30th June, 1974, that these purchases _were last purcha'ies inside the State and were conse queotly exigible to ta~. Sitice the purchases took place before 30th June, 1974, tho assessee would be liable to be taxed at the rate of 3 % which was prevailing at the time when the purchases were nlade. [1075E; G-H; 1076B]

State of Madras v. Shri T. Narayanaswanii Naidu and Anr, (1967) 3 S.C.R. 622, referred to. •

Seaso Rubbers v. State of Kera/a, 48 S.T.C. 256 approved.

CiVIL APPELLATE JURISDICTION: Civil Appeal No. 4160 of 1985

From the Judgment and Order dated 25. 6. 1984 of the Kerala High Court in T. R. C. No. 19 of 1984.

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C.T.S. v. PANDINJARAKARA AGENCIES (Bhagwatl, J.) l07S

V. J. Francis for the Appellant.

r. M. An; ari, Markose Vellapal/y and D. N. Misra, for the Respondent.

The Judgment of the Court was delivered by

BHAGWATi, J. The sole question which arises for determi nation 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_ pur chases were found to be last purchases as a result of events v.hich

took place subsequent to 30. 6. 1974. This question has become material ince 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-~-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 Krala 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. [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 acq uired by last purchase because he may still during the next assess ment 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 subsequente vents it may or may not become the fast purchase inside the State." There ean 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. ·

ut the question' remains as to what is tbe rate at which H

SUPREME COURT REPORTS [1985)3 s.c.R.

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 wa!i 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 Kera/a, 48 S. T. C. 256. We find ouerselves in argeement 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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