Declared goods remain taxable at the last purchase stage, and refund requires proof of Central sales tax payment on the same goods.

Declared goods remain subject to the State single-point levy at the local purchase stage even if they are later sold in inter-State , because the inter-State sale is excluded from the charging chain only for that limited purpose. On the facts, the assessee stayed the last purchaser in the State and was liable to tax on the last purchase of cotton. Refund under the Central Sales Tax scheme was available only where Central sales tax had actually been paid on the same goods; since no such payment was shown, the refund claim failed and rule 23(1) was not examined.

---

---

Issues: (i) whether the assessee was liable to pay tax on the last purchase of cotton within the State under section 4 of the Madras General Sales Tax Act, 1959; and (ii) whether the assessee was entitled to refund of the tax paid on such purchase without showing that Central sales tax had been paid on the same goods.

Issue (i): whether the assessee was liable to pay tax on the last purchase of cotton within the State under section 4 of the Madras General Sales Tax Act, 1959.

Analysis: Declared goods are not taken completely outside the State taxing scheme merely because they are later sold in the course of inter-State trade. The reasoning in the earlier decisions did not equate an inter-State sale with an intra-State sale for all purposes, but only recognised that, for the limited purpose of identifying the locus of the sale, the concept of an inside sale may be adverted to. On the facts, the assessee had made a local purchase of cotton and then effected an inter-State sale. The inter-State sale had to be excluded from the series of sales for the single-point levy under the State Act, and once excluded, the assessee remained the last purchaser in the State. Section 6 did not render declared goods immune from the State levy; it only required the State levy to operate subject to the restriction that inter-State sales are not brought within the charging chain.

Conclusion: The assessee was liable to tax on the last purchase of cotton within the State, and this contention failed.

Issue (ii): whether the assessee was entitled to refund of the tax paid on such purchase without showing that Central sales tax had been paid on the same goods.

Analysis: The refund claim was governed by section 15(b) of the Central Sales Tax Act, 1956, as retrospectively amended by Central Act 61 of 1972, and by the corresponding refund machinery under the State rules. The statutory scheme contemplated refund only where the goods had in fact suffered Central sales tax in the course of inter-State trade or commerce. Since the assessee had admittedly not paid Central sales tax on the same goods, the condition precedent for refund was absent. In that view, the validity of rule 23(1) did not require examination.

Conclusion: The assessee was not entitled to refund without proof of payment of Central sales tax on the same goods.

Final Conclusion: The State levy on the last purchase of declared goods was upheld and the refund claim was rejected, leaving the assessee without relief.

Ratio Decidendi: A declared good remains taxable under the State single-point scheme at the local stage preceding an inter-State sale, and refund under section 15(b) of the Central Sales Tax Act, 1956 is available only when Central sales tax has actually been paid on the same goods.

---