Purchase tax on last purchase before export upheld under a valid State sales tax scheme.

Sections 5, 5A and 8 of the Kerala General Sales Tax Act, 1963 were upheld as a valid exercise of State taxing power under entry 54 of List II. Section 5A was recognised as a valid purchase-tax provision and was not discriminatory or contrary to article 301. Section 8 was treated as fixing the taxable point in the purchase chain immediately before export or despatch outside the State. On that basis, the challenge to tax on the dealer's closing stock, including goods despatched outside the State, failed and the assessment was sustained.

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Issues: Whether sections 5, 5A and 8 of the Kerala General Sales Tax Act, 1963 validly authorised levy on goods treated as last purchase and whether the assessment of the dealer's closing stock, including goods despatched outside the State, was liable to tax.

Analysis: The statutory scheme was upheld as a valid exercise of State taxing power under entry 54 of List II of the Seventh Schedule to the Constitution of India. Section 5A had already been recognised as a valid purchase-tax provision, and it was not discriminatory or violative of article 301 of the Constitution of India. Section 8 was treated as fixing the taxable point in a series of purchases at the stage immediately before export or despatch outside the State. The earlier authorities on closing stock and on purchase tax did not assist the appellant, because they did not negate the State's power to treat the relevant turnover as taxable where the goods were the last purchase in the State before export.

Conclusion: The challenge to the levy failed, and the assessment treating the turnover as taxable was upheld against the assessee.

Final Conclusion: The writ appeal was dismissed, and the statutory levy under the Kerala General Sales Tax Act, 1963 was sustained.

Ratio Decidendi: Where goods taxable at a single point are the last purchase in the State before export or despatch outside the State, the State may fix the taxable point immediately before export and levy purchase tax under a valid State sales tax enactment without offending article 301.

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