Deeming fiction for export sales under sales tax law brings closing stock outside the State within last-purchase taxation.

The Explanation to Section 2(xxvi) of the Kerala General Sales Tax Act, as amended and made subject to Section 8, was construed together with the export deeming fiction in Section 8(b). On that scheme, goods held by agents outside the State did not avoid the tax point merely because they remained unsold on 31 March; the export clause fixed the stage immediately before export as the concluding purchase in the series. The Court accordingly treated the closing stock as having acquired the character of last purchase and held it exigible to tax, rejecting the contention that the 1988 amendment failed to produce that result.

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Issues: Whether the purchases of closing stock of goods held by agents outside the State as on 31 March could be brought to tax as having attained the character of last purchase under the Explanation to Section 2(xxvi), read with Section 8(b), of the Kerala General Sales Tax Act, 1963.

Analysis: The unamended Explanation to Section 2(xxvi) had been inserted to ensure that closing stock of goods taxable at the point of last purchase continued to form part of turnover until the goods were sold or otherwise acquired the character of last purchase. The amendment by Act No. 6 of 1988 made the Explanation expressly subject to Section 8. Section 8(b) creates a deeming fiction that, where goods are exported outside the State, the series of purchases concludes at the stage immediately before export. On that statutory scheme, goods held by agents outside the State do not escape the taxable point merely because they remain unsold on 31 March.

Conclusion: The closing stock held outside the State was liable to be treated as having attained the quality of last purchase and was exigible to tax. The contention that the amendment did not achieve that result was rejected.

Ratio Decidendi: Where the charging explanation is made subject to the export provision, the deeming fiction under the export clause determines the point of last purchase and brings closing stock held outside the State within tax liability.

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