Conditional sales tax exemption left pharmacy purchases taxable, so they remained the last purchase point under state law.

A conditional exemption under section 10(1) of the Kerala General Sales Tax Act did not make pharmacy purchases non-taxable from the outset. Purchases of dried ginger, pepper and kacholam by pharmacies remained taxable transactions under section 5, with tax relief available only if the goods were used in the manufacture or preparation of goods for sale. Because the pharmacies were still dealers liable to tax, their purchases counted as the last purchases in the State for identifying the last purchase point. The assessee therefore could not be assessed on the disputed turnover as the last purchaser.

---

---

Issues: Whether the purchases made by the pharmacies, in respect of dried ginger, pepper and kacholam, were still purchases by dealers liable to tax under section 5 of the Kerala General Sales Tax Act, 1963, so that the assessee could not be treated as the last purchaser in the State.

Analysis: The notification issued under section 10(1) of the Kerala General Sales Tax Act, 1963 granted only a conditional exemption from payment of tax to pharmacies, subject to the goods purchased being used in the manufacture or preparation of goods for sale. The notification did not render the pharmacies non-liable to tax ab initio. The purchases by the pharmacies remained taxable transactions under section 5, with only the payment of tax being conditionally exempted on fulfilment of the prescribed condition. Accordingly, the pharmacies were still dealers liable to tax for the purpose of identifying the last purchase point.

Conclusion: The pharmacies' purchases constituted the last purchases within the State by dealers liable to tax under section 5, and the assessee could not be taxed on the disputed turnover as the last purchaser.

---