Consignment stock and last purchase tax: goods held outside the State were not liable merely as year-end closing stock.

Goods sent outside the State to agents on consignment basis did not acquire the character of the "last purchase" merely because they remained in closing stock at year-end. Purchase tax arises only when the purchase becomes the last purchase inside the State, and goods retained by the assessee with power of disposal continued to form part of the assessee's stock for tax purposes. The fact that the closing stock was held outside the State made no legally relevant difference, and the statutory explanation to section 2(xxvi) required such goods to be carried forward until sold or otherwise becoming the last purchase in the State. On that basis, the closing stock was not exigible to tax and the Revenue's revisions failed.

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Issues: Whether goods taxable at the point of last purchase, when sent outside the State to agents on consignment basis and remaining in closing stock at the end of the year, acquire the character of last purchase so as to be exigible to tax under the Kerala General Sales Tax Act, 1963.

Analysis: The liability to purchase tax arises only when the purchase acquires the character of the last purchase inside the State. Closing stock declared at the end of the assessment year does not, by that fact alone, become taxable merely because the goods are held outside the State through agents on consignment basis. The goods continued to belong to the assessee, who retained power of disposal, and there was no legally relevant distinction between closing stock held inside the State and closing stock held outside the State for this purpose. The statutory explanation to section 2(xxvi) reinforced that such goods are to remain part of total turnover in subsequent years until they are sold or otherwise acquire the character of last purchase in the State.

Conclusion: The closing stock of goods sent outside the State on consignment basis did not become exigible to tax as last purchase, and the Revenue's revisions failed.

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