Taxability of rubber cess, no set-off without statute, and documentary evidence determining inter-State sale character.

Rubber cess was treated as outside taxable turnover under the Kerala General Sales Tax Act where the earlier Full Bench view on the same assessee applied. The text also explains that, absent any statutory provision for set-off, tax allegedly collected by a selling dealer on reclaimed rubber cannot be adjusted against the purchaser's liability; the proper remedy is a refund claim if the amount was remitted to the Government. On classification, the documentary trail of orders, invoices, forms and waybills supported treatment of the rubber purchases as inter-State transactions, and routing payment through a local unit was not decisive.

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Issues: (i) Whether rubber cess paid by the assessee was liable to be excluded from taxable turnover under the Kerala General Sales Tax Act, 1963. (ii) Whether the assessee was entitled to adjustment or credit of sales tax allegedly suffered at the time of purchase of reclaimed rubber. (iii) Whether the impugned purchases of rubber were inter-State transactions or local purchases within the State.

Issue (i): Whether rubber cess paid by the assessee was liable to be excluded from taxable turnover under the Kerala General Sales Tax Act, 1963.

Analysis: The exclusion of rubber cess from taxable turnover was treated as concluded by the earlier Full Bench decision concerning the same assessee. The cess could not, therefore, be included in the taxable turnover of the assessee.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether the assessee was entitled to adjustment or credit of sales tax allegedly suffered at the time of purchase of reclaimed rubber.

Analysis: The Court held that, once the assessee was found liable as the last purchaser, a mistaken or bona fide collection of tax by the selling dealer did not shift the statutory liability. There was no provision in the Kerala General Sales Tax Act, 1963 empowering the authorities or the revisional court to grant such adjustment. The assessee's remedy, if any, was confined to a claim for refund under the statutory mechanism if the amount had been remitted to the Government.

Conclusion: The issue was decided against the assessee.

Issue (iii): Whether the impugned purchases of rubber were inter-State transactions or local purchases within the State.

Analysis: The documentary evidence, including purchase orders, invoices, forms, waybills and internal memoranda, supported the finding that the transactions were direct purchases by the Madras head office from suppliers in Kerala. The fact that payment was routed through the local unit was held not to be decisive of the character of the transaction. The concurrent findings of the appellate authorities that the transactions were inter-State were upheld.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The revisions failed overall, with the appellate findings sustaining the assessee's position on the principal taxability issues and rejecting the Revenue's challenge to the inter-State character of the transactions.

Ratio Decidendi: The character of a sale depends on the substance of the transaction and the documentary chain of sale, not merely on the channel through which payment is made; and in the absence of a statutory provision permitting set-off, tax paid to a selling dealer cannot be adjusted against the purchaser's liability.

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