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DY. COMMISSIONER OF SALES TAX (LAW)

BOARD OF REVENU~ (TAXES)

PADINJARAKARA AGENCIES

January 21, -1985

(P. N. BHAGWATI AND RANGANATH MISRA, JJ.J

Kerala General Sals Tax Act, Item 71 of First Schedui~-Liabili<yro "purbhase tax" as last purchase, w!ren arises--Rate of tax enhanud aftr a ctrtafrr date-Goods in stock acqt.lrd prlor to such date and sold subrequently In inter-state-trade or commerce-Whetlter revised rate of tax app/icuble.

The rspondent-assessec had made certain purchases before 30th Juno, 1974 and sold them subsequently io the course of inter-state trad.: or commerce.

Tbc rate of purchase tax under Item 71 of the First Schedule to tbe Kerala Ocnoral Sales Tax was increased from 3% to 5% with effect from 1st July, 1974.

Tho High Court held that tho 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, unl.:ss the purchases acquired the quality of bcina last purchases in tbc State,.

In the instant case there can bo no doubt that tbe assessee became liable to pay tax on the purchases made by it prior to 30th June, 19 74, as soon as it became determined though subsequent to 30th June, 1974, that these_ urchascs were .last pur. chases inside tbe State and were subsequently exog1ble to tax. Soncc tbc PUrchases look place before 30th Juno, 1974, ~c assessee wold bo hble to be taxed at the rate of 3% which wlls prcva•hng at the lime wbcn tbo PUrchases were made. {8$2P-H; 8S3B]

State of Madras v. T. NOI'ayauaswamf Naida <h. Anr., (1967] .3 S.C.R.

622, rcrrred to.

1985.

saso Rubbers v. Stat~ of Kamla, 48 S.T.C. 2' 6• approved.

Civ.il Appeal No. 4160 of CIVIL APPELLATB JUR~'iDICTJON :

i '1.

8.52

SUPREME COURT REPORTS

(1985! i S.C.R,•

. From the Judgment and Ordr dated 25.6.1984 of the High Court in T.R.C. No. 19 of l9iS4.

K.crala ,; i)·. PI

- V. J, Fra11cis for the Appellant.

T. M. Ansari, Markose Vellcipally 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 -1

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 l st July, 1974. Now it is no• disputed in the present case that the. purchases of goods effected by the assessee prior to 30-6-74 were last purchases withi~ 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 wertnot sold within the Stat'c and hence the assessee was clearly the last purchaser within the State and as such was Hable to pay purchase tax under Item 71 of the First Scheduk to the Kerala General Sales Tax Act. Equally it is clear that th:: 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 Madraj v. Shri T. Nora yanaswami Naidu & Anr.(l) when the assessee "files a return and ·

. . b 'dtohave declares the stock m hand, the stock m hand cannot c sm t . .11 d 0 o the nex been acquned by last purchase because he may st1 un o ds .. , asicssment year, sell it or he may consume it himself or the gohc may be destroyed, etc. He would be entitled to claim bebfore tock · of t c s -assessing authorities that the character of acqutsttloll _ or . . . . t vents 1t o1aY m hand was undcrmmcd; m the light of subsequen c, .h e can may not become the last purchase inside the State. 1 ecame therefore be no doubt that the assessee in the prc~:nt ca; th June. liable to pay tax on the purchases made by it pnor to t to 30th

1974, as soon as it bccam" dettrmined though subscqucn h State ns•de t c June: 1974, that these purchases were last purchases 1

and were consequently exigible to tax.

. I

(l) [1967] 3 S.C.R. 622.

. .• ·.. . . . ~

c. S, T. v. PAD~NJARAKARA AGENCIES (Bhagwatl. J.) . 853

But thequestion 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 pur- . chases made by the assessee prior to 30th June 1974 were taxable at the B

rate of 3%. We may point out that a similar view has lieen taken by the Kerala High Court in Seaso Rubbers v. State of Kerala(l). 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. C

M.L; A. , Appeal dismissed ..

(1) 38 S.T.C. 2S(i