Purchase tax on bullion depends on seller taxability, not merely missing exemption declarations or absence of seller assessment.

Purchase tax under section 5A of the Kerala General Sales Tax Act does not arise merely because the declaration required by an exemption notification was not issued; liability depends on whether tax was actually payable by the seller at the sale point. Bullion purchased from non-resident Indians is therefore not automatically brought within section 5A for want of the prescribed declaration. The purchaser must, however, substantiate that the sellers were liable under section 5(1) by producing sale bills, purchase vouchers and identity particulars showing the sellers' bullion business and turnover, so the assessing authority can examine the seller's taxability.

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Issues: (i) Whether purchase tax under section 5A of the Kerala General Sales Tax Act, 1963 could be levied on bullion purchased from non-resident Indians merely because the declaration prescribed by the exemption notification was not issued. (ii) Whether the turnover of bullion purchased from non-resident Indians could be excluded from section 5A only if the purchaser proved that the sellers were dealers liable under section 5(1) of the Kerala General Sales Tax Act, 1963.

Issue (i): Whether purchase tax under section 5A of the Kerala General Sales Tax Act, 1963 could be levied on bullion purchased from non-resident Indians merely because the declaration prescribed by the exemption notification was not issued.

Analysis: Purchase tax under section 5A arises only where the commodity purchased is taxable and the purchase is in circumstances in which no tax is payable by the seller at the point of sale in the State. The exemption under S.R.O. No. 1727 of 1993 required the prescribed declaration, but non-issuance of that declaration by itself did not automatically determine liability under section 5A. The decisive question was whether tax was in fact payable by the seller at the sale point or whether the seller was outside the taxing net.

Conclusion: Mere failure to issue the declaration did not, by itself, justify fastening purchase tax under section 5A on the purchaser.

Issue (ii): Whether the turnover of bullion purchased from non-resident Indians could be excluded from section 5A only if the purchaser proved that the sellers were dealers liable under section 5(1) of the Kerala General Sales Tax Act, 1963.

Analysis: Bullion was treated as taxable at the sale point under section 5(1) read with the relevant entry in the First Schedule. If a non-resident Indian seller was engaged in the business of importing and selling bullion and his turnover exceeded the taxable limit, the liability rested on that seller and not on the purchaser under section 5A. The purchaser therefore had to produce sale bills or purchase vouchers showing the sellers' identity and the nature and frequency of their bullion sales so that the assessing authority could examine whether the sellers were liable under section 5(1). Absence of assessment against the sellers, by itself, could not justify shifting the tax burden to the purchaser.

Conclusion: The purchaser could avoid section 5A only by proving that the sellers were liable to tax under section 5(1); failing such proof, the purchases remained liable to be examined under section 5A.

Final Conclusion: The Tribunal's view was set aside and the matter was sent back for fresh enquiry on the sellers' liability, with the respondent being given an opportunity to produce purchase vouchers, sale bills and identity particulars.

Ratio Decidendi: Purchase tax under section 5A cannot be imposed on the buyer merely because the seller failed to obtain or use the prescribed exemption declaration; the real test is whether the seller was liable to tax at the sale point, which must be determined on the basis of proof of the seller's business activity and turnover.

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