Central sales tax on timber depends on the actual local sale rate at the relevant point, not the general schedule rate.

For inter-State sales of timber without C forms, section 8(2)(b) of the Central Sales Tax Act requires reference to the rate actually applicable to the same goods in local sale by the assessee at the relevant point of sale, not merely the general rate in the State schedule. Where timber had already suffered first-point tax on purchase from Government depots, the subsequent local sale attracted only the lower rate plus surcharge, so the State rate remained below ten per cent. The Central sales tax therefore fell at the statutory minimum rate of 10 per cent, not 12.5 per cent.

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Issues: Whether, for levy of Central sales tax on inter-State sale of timber not supported by C forms, the applicable rate under section 8(2)(b) of the Central Sales Tax Act, 1956 was to be determined by the general rate shown in the Fifth Schedule to the Kerala General Sales Tax Act, 1963 or by the rate actually applicable to the assessee's sale in the State at the relevant point of sale.

Analysis: Under section 8(2)(b) of the Central Sales Tax Act, 1956, the tax on inter-State sales of goods other than declared goods is the higher of ten per cent or the rate applicable to sale or purchase of such goods inside the appropriate State. The expression deeming the dealer liable under the State law requires reference to the rate which would apply to the same goods if sold locally by the assessee at the relevant point of sale. Timber under entry 8 of the Fifth Schedule to the Kerala General Sales Tax Act, 1963 carried different rates at different points, and if the assessee had already borne the first-point tax on purchase from Government depots, the subsequent local sale was only at 2.5 per cent plus surcharge. In that situation the State rate relevant for section 8(2)(b) remained below ten per cent, attracting the statutory minimum rate under the Central Act.

Conclusion: The applicable Central sales tax rate was 10 per cent and not 12.5 per cent. The assessee's contention succeeded.

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