Taxability of hire charges, water cess and stock transfers depends on evidence of consideration and interstate movement.

Hire charges for furniture and equipment were treated as taxable where the documents showed retention of ownership by the assessee and no reliable material disproved transfer of the right to use; the limited second-sale claim succeeded only for invoices linked to prior taxable purchases, and exemption forms were rejected for inadequate production and authentication. Water cess under the Water (Prevention and Control of Pollution) Cess Act, 1977 was treated as part of the consideration for water supply and was includible in turnover for purchase tax under the Kerala General Sales Tax Act. F-Forms alone were insufficient to prove stock transfer without independent evidence of movement of goods outside the State.

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Issues: (i) Whether tax could be sustained on hire charges for furniture supplied to employees, the alleged second sale of furniture to employees, levy on equipment hire charges, and rejection of Form-18 and SRO forms claimed for exemption. (ii) Whether water cess paid under the Water (Prevention and Control of Pollution) Cess Act, 1977 could be included in turnover for levy of purchase tax under Section 5A of the Kerala General Sales Tax Act, 1963. (iii) Whether stock transfers supported by F-Forms were rightly rejected for failure to establish movement of goods outside the State.

Issue (i): Whether tax could be sustained on hire charges for furniture supplied to employees, the alleged second sale of furniture to employees, levy on equipment hire charges, and rejection of Form-18 and SRO forms claimed for exemption.

Analysis: The hire arrangement for furniture showed retention of ownership by the assessee and collection of hire charges, which brought the transaction within transfer of the right to use. The claim that the arrangement was merely a loan was unsupported by the documents produced. The plea of second sale succeeded only to the limited extent of the invoices proved to relate to prior taxable purchases, but no evidence was produced for the remaining items. The equipment hire charges were also sustained because the assessee failed to produce the contract or other material showing that the equipment remained under its control or that the hiring was otherwise not taxable. The Form-18 and SRO forms were rejected on facts because they were not satisfactorily produced before the assessing authority, lacked proper authentication, and did not justify fresh consideration.

Conclusion: The findings on hire charges, equipment charges, and rejection of exemption documents were upheld against the assessee.

Issue (ii): Whether water cess paid under the Water (Prevention and Control of Pollution) Cess Act, 1977 could be included in turnover for levy of purchase tax under Section 5A of the Kerala General Sales Tax Act, 1963.

Analysis: Water cess under the Water (Prevention and Control of Pollution) Cess Act, 1977 is levied on the supply and consumption of water by specified industries and local authorities. The cess was treated as part of the consideration linked to supply of water by the Irrigation Department, and therefore as an element legitimately includible in turnover for purchase tax purposes. The earlier decision on water charges was distinguished on facts, while the principle that cess forming part of the taxable consideration may enter turnover supported the Revenue's case.

Conclusion: The inclusion of water cess in turnover was upheld in favour of the Revenue.

Issue (iii): Whether stock transfers supported by F-Forms were rightly rejected for failure to establish movement of goods outside the State.

Analysis: F-Forms are only one mode of evidence for inter-State transfer and do not by themselves discharge the assessee's burden to prove movement of goods. Since the assessee failed to establish transport through check-post declarations or other reliable material showing movement outside the State, the rejection of the claim was justified.

Conclusion: The rejection of the F-Form based stock transfer claim was upheld against the assessee.

Final Conclusion: The revisions failed on the substantive tax issues decided on merits, and the Revenue's assessments were sustained, with only the limited liberty granted to agitate the correct rate of tax on bitumen and SBPS and the computation of interest before the assessing authority.

Ratio Decidendi: Where the assessee fails to establish exemption, non-taxability, or inter-State movement with reliable evidence, and where a cess forms part of the taxable consideration for supply, the levy and inclusion in turnover will be sustained.

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