TaxTMI 
TaxTMI 
1998 (1) TMI 433
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....ter processing them dispatches the same to agents in the North Indian States for sale on consignment who effect sales according to the market trends and render accounts, sales statements to the appellant. Drafts or cheques for sale proceeds less expenses and commission are also sent simultaneously and the appellant has been paying sales tax for each month by working out the purchase value involved in the sales effected by the agents monthly. It is also stated that at the close of each financial year sometimes certain stocks of goods remain with the agents and the appellant pays sales tax on the purchase value of such stock in subsequent year as and when the stock is sold and the accounts of sales in respect thereof are received from the age....
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....te. In State of Madras v. T. Narayanaswami Naidu [1968] 21 STC 1, this Court was of the view that, under section 4 of the Madras General Sales Tax Act, a dealer was not liable to pay sales tax on purchases of goods until the purchases acquired the quality of being the last purchases inside the State. In other words, when the assessee filed a return and declared the stock in hand, the stock in hand could not be said to have been acquired by last purchase, because the assessee might still during the next assessment year sell it or he might himself consume it or the goods might be destroyed. This Court was further of the view that the assessee would be entitled to claim before the assessing authorities that the character of acquisition of the....
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....nd form the closing stock of a year, shall be shown in the subsequent year as a part of total turnover until they are sold and the goods acquire the quality of last purchase, exigible to tax. This explanation came to be interpreted by a Division Bench of Kerala High Court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Trivandrum v. Keveyam & Co. [1986] 63 STC 387. The High Court of Kerala interpreting the Explanation held, "that there should not be any distinction between the closing stock of the goods held by an assessee inside the State and outside the State as the goods sent to his agents outside the State on consignment basis still continued to be the goods of the assessee and as the assessee had got th....
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....n 8 in the case of goods which are taxable at the point of last purchase in the State by a dealer liable to tax under section 5 and which are held as closing stock on the last day of any financial year, the amount for which such goods were purchased by the dealer shall be deemed also to be a part of his total turnover for the subsequent year or each of the subsequent years until such goods are either sold by him in the State or such purchase acquires the character of last purchase in the State in the hands of such dealer and in case such purchase acquires the character of last purchase in the State in the hands of such dealer, the turnover in respect of such purchase shall be liable to tax in the year in which the purchase acquires the char....
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....object. 9.. It does not appear to us that there is any difference between the two arguments of learned counsel for the appellant. We, therefore, proceed to deal both the arguments together. We have already noticed that the unamended. Explanation to section 2(xxvi) was introduced with a view to give effect to the decision of this Court in Narayanaswami Naidu [1968] 21 STC 1 and further to secure the interest of revenue by making closing stock within the reach and knowledge of the department by treating the goods exported outside the State as part of the total turnover in subsequent year, till the goods attain the quality of last purchase of goods. The non obstante clause used in the unamended Explanation to section 2(xxvi) whittled down th....
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....State will not acquire the character of last purchase till it is sold. Under the cover of this decision, many dealers claim that their stock of goods held outside the State will not acquire the character of last purchase until the goods are sold and as such they are not liable to pay tax on such goods. As a result, Government is losing huge amount of tax. To overcome this situation Government decided to amend the Act suitably." 10.. Having regard to the phraseology and the objects of the amending Act extracted above, it is fairly clear that the amendment in Explanation to section 2(xxvi) was made with a view to alter the legal position that closing stock held outside the State will not acquire the character of last purchase till it is sold....