Retrospective purchase tax cannot defeat preserved exemption where Form No. 25 declarations were impracticable at purchase time.

Retrospective purchase tax on cashewnut kernel did not defeat the exemption preserved by the second proviso to section 3(1) of the Kerala Sales Tax (Levy and Validation) Act, 1965, where the underlying purchase had already been treated as not liable to tax at the time it was made. The assessee had bought the nuts from registered dealers, and insisting on Form No. 25 declarations for that earlier period was held unreasonable because the levy was introduced later with retrospective effect. The Tribunal was therefore justified in holding that the absence of declarations did not bar the exemption claim, and the assessee was not obliged to produce Form No. 25.

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Issues: Whether, for the period 1962-63, the assessee was entitled to exemption from purchase tax on cashewnut kernel under the second proviso to section 3(1) of the Kerala Sales Tax (Levy and Validation) Act, 1965, without producing declarations in form No. 25.

Analysis: The retrospective levy imposed tax on the purchase of cashewnut kernel for the relevant period, but the second proviso preserved exemption where tax had already been levied on the purchase of the coconut or cashewnut from which the kernel was produced. The assessee had purchased the nuts from registered dealers, and at the time of purchase the commodity was treated as not liable to purchase tax on the basis of the earlier decision of the Court. In that situation, it was not reasonable to insist on declarations in form No. 25 for an anterior period merely because the levy was later introduced retrospectively. The Tribunal was therefore justified in holding that the absence of declarations did not defeat the claim for exemption under the proviso.

Conclusion: The assessee was not obliged to produce declarations in form No. 25 to claim exemption under the second proviso to section 3(1).

Final Conclusion: The revision failed because the Tribunal's view on exemption was upheld, and the retrospective levy did not alter the assessee's entitlement to exemption on the facts found.

Ratio Decidendi: Where a tax is imposed retrospectively, an assessee cannot be denied an exemption preserved by a proviso merely for not producing a declaration that was unnecessary and impracticable at the time of the original purchase.

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