Dy. Commissioner of Sales Tax (Law) Board of Revenue (Taxes) v. Padinjarakara Agencies

Judgment

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 · 'dtohave declares the stock m hand, the stock m hand cannot c sm .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 go~hc 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. (l) [1967] 3 S.C.R. 622. c. S, T. v. PAD~NJARAKARA AGENCIES (Bhagwatl. J.) . 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