Purchase tax under section 5A applies only where goods or packing materials have not already suffered tax at the relevant stage.

Purchase tax under section 5A of the Kerala General Sales Tax Act, 1963 applies to goods that have not already suffered tax at an earlier taxable point and are later consumed, dealt with, or exported in a manner covered by the provision. Ivory purchased from the Travancore Devaswom Board was taxable under section 5A, except to the extent it was sold within the State and had already borne tax. Finished articles purchased from non-dealers and exported outside India were also taxable because the earlier sale had not suffered tax. Packing materials required fresh examination because tax depended on the extent to which they related to taxable local sales or untaxed export, consignment, or inter-State disposals.

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Issues: (i) whether purchase turnover of ivory purchased from the Travancore Devaswom Board and used in manufacture or export was liable to purchase tax under section 5A of the Kerala General Sales Tax Act, 1963; (ii) whether the purchase turnover of packing materials used for local sales, inter-State sales, export sales and consignment sales was liable to purchase tax under section 5A; (iii) whether the purchase turnover of finished articles locally purchased and exported outside India was liable to purchase tax under section 5A.

Issue (i): Whether purchase turnover of ivory purchased from the Travancore Devaswom Board and used in manufacture or export was liable to purchase tax under section 5A of the Kerala General Sales Tax Act, 1963.

Analysis: The sale by the Devaswom Board was not a taxable sale at the point of sale because the Board was neither a dealer in ivory nor carrying on such business. The raw ivory purchased by the assessee had, however, been partly sold locally and partly consumed in manufacture or sent out of the State. To the extent the quantity had already suffered tax on local sale, purchase tax could not again be levied. To the extent the ivory had not suffered tax and was consumed in manufacture or otherwise dealt with in a manner attracting section 5A, the statutory levy applied.

Conclusion: The purchase turnover of ivory was exigible to tax under section 5A except to the extent of the quantity sold within the State.

Issue (ii): Whether the purchase turnover of packing materials used for local sales, inter-State sales, export sales and consignment sales was liable to purchase tax under section 5A.

Analysis: Packing materials used for goods sold within the State were treated as part of the composite sale price and would already have borne tax. Packing materials used for export sales and consignment sales outside the State, however, had not suffered tax at any point. To that extent they fell within clause (c) of section 5A(1), subject to the distinction that tax would not arise where the disposal was a direct result of inter-State trade or commerce. The material already on record did not enable a final determination of the exact taxable extent.

Conclusion: The levy under section 5A on packing materials was set aside and the matter was remitted for fresh consideration on the extent of taxability.

Issue (iii): Whether the purchase turnover of finished articles locally purchased and exported outside India was liable to purchase tax under section 5A.

Analysis: The finished articles were purchased from persons who were not dealers and whose sales had not suffered tax under section 5. Since the goods had not borne tax at the relevant point and the subsequent purchase and export brought the transactions within the statutory scheme of section 5A, the purchase turnover was liable to tax.

Conclusion: The purchase turnover of the finished articles was exigible to tax under section 5A.

Final Conclusion: The assessment was sustained on ivory and finished articles, but the levy relating to packing materials was reopened and sent back for reconsideration, leaving the assessee only partly successful.

Ratio Decidendi: Purchase tax under section 5A applies to goods which have not suffered tax at an earlier point and are thereafter consumed, dealt with, or exported in a manner covered by the provision, but it does not apply where the goods or their packing have already borne tax at the relevant taxable stage.

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