Non-obstante turnover exclusion under sales tax law kept protected inter-State transactions outside assessable turnover.

Section 26 of the Travancore-Cochin General Sales Tax (Amendment) Act, 1951 was construed as overriding inconsistent provisions of the Act and Rules in relation to sales protected by Article 286, including inter-State sales and sales outside the State or in the course of import or export. Those transactions were treated as outside the taxing scheme altogether, so their value could not be included in assessable turnover. The manufacturer-specific deduction rules for registered cocoanut or groundnut oil dealers therefore did not apply to such protected sales. On that construction, the revenue's method of computing turnover was upheld.

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Issues: Whether the non-obstante provision in section 26 of the Travancore-Cochin General Sales Tax (Amendment) Act, 1951 required inter-State sales to be excluded from the dealer's turnover, and whether the manufacturer was entitled to deduct the full value of copra purchased in computing net assessable turnover.

Analysis: The statutory scheme under sections 2(j), 2(k), 3(4) and the turnover rules treated gross turnover as including sales generally and permitted deductions under rule 7(1)(k) read with rule 20(2) for registered manufacturers of cocoanut or groundnut oil and cake. However, section 26, introduced after the Constitution, provided that no tax shall be imposed on sales taking place outside the State, in the course of import or export, or in the course of inter-State trade or commerce. The non-obstante language was construed as overriding inconsistent provisions of the Act and the Rules in respect of transactions falling within Article 286 of the Constitution of India. Such transactions were therefore treated as outside the purview of the taxing provisions altogether, so that their value could not be included in turnover for assessment and no deduction under the manufacturer-specific rule arose in relation to them.

Conclusion: Section 26 excluded the protected inter-State transactions from assessable turnover, and the revenue's method of computation was upheld. The challenge to the assessment failed.

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