State levy controls Central sales tax treatment of watery coconuts under Section 8(2A), subject to first-seller liability

Inter-State sales of watery coconuts were examined under the Central Sales Tax Act against a State regime that imposed tax only at a specified stage. Section 8(2A) was treated as governing the rate and effect of general exemption, but not as permitting a different Central levy where the State law itself fixed the taxable stage. The Explanation to Section 8(2A) was considered, yet it did not displace the principle that the Central levy must follow the State levy. Whether the dealer was the first seller, and therefore liable at all, was left to the assessing authority.

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Issues: Whether inter-State sales of watery coconuts could be taxed under the Central Sales Tax Act when the corresponding State sales tax regime imposed liability only at a specified stage and Section 8(2A) was invoked.

Analysis: The statutory scheme was examined with reference to the State levy on watery coconuts and the Central Sales Tax Act. The Court treated the Central levy as dependent upon the manner in which the State law fastened tax on the goods. Section 8(2A) was held to govern the rate and the consequence of general exemption, but not to authorise a different levy where the State law itself fixed the taxable stage. The Explanation to Section 8(2A) was noted, but the Court held that it did not displace the principle that the Central levy must follow the State levy. The factual question whether the petitioner was the first seller, and therefore liable at all, was left to the assessing authority.

Conclusion: The petitioner was not finally held liable to tax in these proceedings, and the matter was sent back for final assessment in the light of the Court's observations.

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