TaxTMI 
TaxTMI 
1990 (5) TMI 220
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...., ginger, etc., within the State. A portion of the goods so purchased is sold to dealers outside the State pursuant to the contract entered into between the petitioner-firm and the buyers outside the State in the course of inter-State trade and the remaining portion of the goods purchased is transported to the petitioner's agents outside the State on consigning the goods to sell for others. For the assessment year 1980-81 the petitioner-firm submitted return under the Act in form No. 8 showing a total turnover of Rs. 82,87,661 out of which the petitioner-firm claimed exemption of Rs. 32,66,000 representing the turnover, according to it, involved in consignment of goods. Thus the taxable turnover shown in the return was Rs. 50,21,661. The second respondent found that the return filed cannot be accepted as the taxable turnover of gunny under section 5A of the Act has not been declared, for the local sales of pepper for Rs. 1,63,200 separate purchase account has not been maintained and the total and taxable turnover reported did not agree with the accounts. The second respondent also found that the place of business of the petitioner was inspected by the Intelligence Officer on July 9....
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....uments to establish the consignment transfer of goods in which case alone the petitioner could not be treated as last purchaser with respect to the goods involved in such transfer of goods to his agent. Out of the goods purchased taxable at the last purchase point, purchase was to the tune of Rs. 83,75,430, the sale within the State was only for Rs. 1,63,200 and the remaining goods were taken outside the State and no documents as required under the Central Sales Tax Act, 1956 and Rules were produced before the assessing authority to establish the fact that they related to consignment transfer of goods. Hence the petitioner's claim that a turnover of Rs. 70,42,000 is liable to be excluded from taxable turnover on the ground that the said turnover related to consignment transfer of goods was negatived by the assessing authority." It is also stated in paragraph 8 of the counter-affidavit as follows: "No tax was levied on the turnover of consignment transfer. The tax was levied on the purchase turnover of the goods on the ground that the petitioner was the last purchaser in respect of such goods within the State. It is respectfully submitted that the grounds raised in the original pe....
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....iable to tax under the Act in circumstances in which no tax is payable under section 5 and either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State or despatches them to place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall, whatever be the quantum of the turnover relating to such purchase per year, pay tax on the taxable turnover relating to such purchase for the year at the rates mentioned in section 5. It is provided in section 8 of the Act that where in the case of any goods tax is leviable at one point in a series of sales or purchases such series shall (omitting the unnecessary portion) in the case of goods exported to any other State in India be deemed to conclude at the stage of the sale or purchase effected immediately before the export of such goods. Therefore under section 5A and section 8 the petitioner's purchase of pepper will become exigible to tax having attained the quality of last purchase when the goods have been exported outside the State. 6.. The constitutional validity of section 5A was ....
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....o their purchase by the dealer if they are not available for such taxation. This too, only if in regard to the purchase by the dealer the goods did not suffer tax at the purchase point or the sale point." This decision has been confirmed by a Division Bench of this Court in Yusuf Shabeer v. State of Kerala [1973] 32 STC 359. The Division Bench noted that under section 5A sales of certain goods regarding which no tax was payable before the introduction of the section though the sale or purchase of such goods were generally taxable under the Act, were also made taxable in the hands of the dealer purchasing those goods provided the conditions of the section were satisfied. The conditions of the section are (a) consuming such goods in the manufacture of other goods for sale or otherwise, (b) disposal of such goods in any manner other than by way of sale in the State and (c) despatches of the goods to any place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. Section 5A of the Act is not subject to section 5. The contention that the tax imposed by section 5A is a tax not on purchase but on the use or consumption was held to....
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....urchase turnover with regard to goods, the sale or purchase of which though generally liable to tax under the Act have not, due to the circumstances of particular sales, suffered tax under section 3, 4 or 5, and which after the purchase, have been dealt with by him in any of the modes indicated in clauses (a), (b) and (c) of section 7-A(1)." The validity of section 7-A was upheld by the Supreme Court and the levy of purchase tax on arecanut, turmeric, etc., on the last purchase point was held to be valid under section 7-A when the goods were despatched to any place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. 7.. Counsel for the petitioner submitted that what is taxed in the case is the closing stock and in view of the decision reported in State of Madras v. Narayanaswami Naidu [1968] 21 STC 1 (SC), the closing stock of a dealer cannot be subjected to tax. The question considered in that case was whether the closing stock will attain the character of last purchase at the close of the assessment year. Dealing with that question the Supreme Court held: " ............ it seems to us clear that a dealer is not liable....
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....he export of such goods. Therefore if the series is concluded at the export of the goods the subsequent sale or purchase of the same outside the State will not be counted for determining the last purchase point. Hence it has to be held that the purchase of pepper effected by the petitioner became the last purchase liable to be taxed under sections 5 and 5A read with section 8 of the Act, on export. 8.. Counsel for the petitioner submitted that in the light of the recent decision of the Supreme Court in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71, which approved the decision in Bata India Ltd. v. State of Haryana [1983] 54 STC 226 (P&H) the provision like section 5A(1)(c) will have to be held unconstitutional. I do not agree. The validity of section 5A(1)(c) has been upheld by the Supreme Court in the decision reported in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191, by a Bench of three Judges. It cannot be contended that the decision in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 (which is a decision by a Bench of two Judges) has the effect of overruling the said decision. Further the questions arose for consideration in Bata India Ltd. v. State o....
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....to a place outside the State in the course of inter-State trade or commerce. Inevitably it would thus result in a duality of taxation on the same or similar transactions-one by the State of Haryana and other by the Union of India. It is significant to highlight that admittedly the power of taxation herein is not even remotely in the Concurrent List and is exclusively in the parliamentary field by virtue of entry No. 92B. Therefore, allowing the States to tax the consignment of goods in inter-State trade or commerce, in the garb of a tax on the despatch of such goods outside the State otherwise than by way of sale in the course of inter-State trade or commerce would, in essence, be negativing the whole constitutional exercise culminating in the relevant provisions of the Fortysixth Amendment for confining the taxation power on inter-State consignment of goods to the Union of India alone." In short the petitioner in that case purchased packing material and lubricating oil within the State of Haryana for use in their factory and also for packing the manufactured items. The manufactured goods were despatched to their depot outside the State. The tax imposed on the despatch of goods wa....
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....on in Malabar Fruit Products Co. v. Sales Tax Officer [1972] 30 STC 537 (Ker) approved in the decision in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191 (SC) holding that in section 9 in Goodyear India Ltd.'s case [1990] 76 STC 71, the raw materials purchased are used in the manufacture of new goods and thereafter those new goods were despatched outside the State of Haryana whereupon the tax was levied, and observed that the said important factor is wholly missing in section 7-A of the Tamil Nadu Act which was considered in Kandaswami's case [1975] 36 STC 191 (SC). Therefore, the decision of the Supreme Court in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71, will not help the petitioner at all in this case as it deals with a different situation than the one I am concerned in this case. 9.. Placed in this situation the petitioner challenges the validity of section 8 along with section 5A of the Act. Under section 5 of the Act every dealer (other than a casual trader or agent of a non-resident dealer) whose total turnover for a year is not less than one lakh rupees and every casual trader or agent of a non-resident dealer, whatever be his total turnover for the year,....
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.... or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I. Where the taxing event is the sale or purchase of goods it is a tax under entry 54 of List II. It is well-known that the power to legislate is given to the Legislature by article 246 of the Constitution. The entries in the three Lists are only legislative heads or fields of legislation, they demarcate the area over which appropriate Legislature can operate. [See Harakchand Ratanchand Banthia v. Union of India [1969] 2 SCC 1661. In Union of India v. H.S. Dhillon [1971] 2 SCC 779, the Supreme Court observed: "We are compelled to give full effect to Article 248 because we know of no principle of construction by which we can cut down the wide words of a substantive article like article 248 by the wording of entry in Schedule VII." In Banarasi Dass v. Wealth Tax Officer [1965] 56 ITR 224; AIR 1965 SC 1387, the Supreme Court laid down that it may not be possible to import any limitation in interpreting a particular entry in the List by comparing the said entry or contrasting it with any other entry in that very List. While the court is determining the scope of the area covered by a particular ....