Class-based sales exemption does not make water non-taxable; purchase tax liability can still arise under the Act.

A limited exemption under section 10(1)(ii) of the Kerala General Sales Tax Act, confined to sales by a specified class of sellers, did not remove water from the category of goods otherwise taxable under the Act. Because sales by persons outside the exempt class remained taxable, the purchase turnover of water continued to attract tax under section 5A. The prior decision on an exemption operating at all points of sale was distinguished as inapplicable to a class-based exemption. The assessee's contention therefore failed, and purchase-tax liability was upheld.

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Issues: Whether the purchase turnover of water was liable to tax under section 5A of the Kerala General Sales Tax Act when the sale of water by the local authority was exempt under section 10(1)(ii) of that Act.

Analysis: The exemption under section 10(1)(ii) attached only to sales by the specified class of sellers and did not remove water from the category of goods otherwise taxable under the Act. Water remained taxable because sales by persons outside the exempt class continued to be liable to tax. The prior decision dealing with an exemption operating at all points of sale could not be applied to an exemption limited to sales by a class of persons.

Conclusion: The purchase turnover of water was liable to tax under section 5A, and the assessee's contention failed.

Ratio Decidendi: A limited exemption granted to sales by a specified class of persons does not make the goods themselves non-taxable under the Act, so purchase-tax liability under section 5A can still arise.

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