Excise duty in purchase turnover under Kerala sales tax law remains includible despite payment on warehouse release

Excise duty paid on release of petroleum products from licensed Central excise warehouses outside Kerala was treated as part of the purchase turnover liable to tax under section 5A of the Kerala General Sales Tax Act, 1963. The Kerala HC applied an earlier Full Bench ruling on the same statutory scheme and held that excise liability remained attributable to the manufacturer, so payment at the stage of removal from bonded warehouses did not change the duty's character for sales tax purposes. Later amendments to warehouse-removal procedure were held not to displace that binding position, and the revision cases failed.

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Issues: Whether excise duty paid on release of petroleum products from licensed Central excise warehouses outside the State of Kerala formed part of the purchase turnover liable to tax under section 5A of the Kerala General Sales Tax Act, 1963.

Analysis: The dispute was held to be fully governed by the earlier Full Bench decision dealing with an identical factual and legal setting. The Court treated the earlier ruling as having considered the scheme of the Kerala General Sales Tax Act, 1963, together with section 3 and the relevant warehouse and removal provisions under the Central Excises and Salt Act, 1944 and the Central Excise Rules. On that basis, the liability for excise duty was understood to remain that of the manufacturer, and the fact that payment occurred on removal from bonded warehouses outside Kerala did not alter the character of the duty for sales tax purposes. The later amendments to the warehouse-removal procedure were held not to displace the earlier binding conclusion.

Conclusion: Excise duty paid on such removal was includible in the purchase turnover under section 5A of the Kerala General Sales Tax Act, 1963, and the assessee's challenge failed.

Final Conclusion: The revision cases were governed by the earlier Full Bench ruling and no departure from that binding position was warranted.

Ratio Decidendi: Where excise duty is statutorily attributable to the manufacturer and is incurred in connection with the purchase and movement of goods under the relevant excise regime, the duty component forms part of the purchase turnover for sales tax purposes despite payment at the stage of release from bonded warehouses.

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