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PETITIONER: DEPUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE (TAX

       Vs.

RESPONDENT: MIS. PADINJARKARA AGENCIES

DATE OF JUDGMENT21/01/1985

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. MISRA RANGNATH

CITATION:  1987 AIR 2244            1985 SCR  (2) 851  1985 SCC  (4) 237        1985 SCALE  (2)1216

ACT:      Kerala  General   Sales  Tax  Act.  Item  71  of  First Schedule-Liability to  purchase tax  as last  purchase, when arises-Rate of  tax enhanced  after a certain date -Goods in stock acquired  prior to  such date and sold subsequently in interest at  trade of  commerce Whether  revised rate of tax applicable.

HEADNOTE:      The  respondent-assessee  had  made  certain  purchases before 30th  June, 1974  and sold  them subsequently  in the course  of  inter-state  trade  or  commerce.  The  rate  of purchase tax  under Item  71 of  the First  Schedule to  the Kerala General  Sales Tax  was increased  from 3% to 5% with effect from  1st July,  1974. The  High Court  held that the purchases made  by the  respondent prior  to 30th June, 1974 were taxable at the rate of 3%.      Dismissing the appeal to this Court. ^      HELD: The  assessee could  not be made liable to tax on the purchases  made by  it prior  to 30th June, 1974, unless the purchases  acquired the  quality of being last purchases in the State. In the instant case there can be no doubt that the assessee  became liable to pay tax on the purchases made by it  prior to  30th June,  1974,  as  soon  as  it  became determined though  subsequent to 30th June, 1974, that these purchases were  last purchases  inside the  State  and  were conse- quently  exigible to  tax. Since  the purchases  took place before  30th June,  1974, the assessee would be liable to be  taxed at  the rate  of 3% which was prevailing at the time when the purchases were made. [1075E; G-H; 1076B]      State of Madras v. Shri T. Narayanaswami Naidu and Anr, (1967) 3 S.C.R. 622, referred to.      Seaso  Rubbers  v.  State  of  Kerala,  48  S.T,C.  256 approved.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 4160 of 1985             From the Judgment and Order dated 25. 6. 1984 of

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the Kerala High Court in T. R. C. No. 19 of 1984. 1075      V. J. Francis for the Appellant. A      R.M. Ansari ,Markose Vellpally and D. N. Misra, for the Respondent,      The Judgment of the Court was delivered by BHAGWATI,  J.   The   sole   question   which   arises   for determination in  this appeal  is as  to what is the rate at which the  goods which  had been purchased earlier and which were in  stock with  the assessee on 30-6-74 were assessable to purchase  tax when  the purchases  were found  to be last purchases as  a result of events which took place subsequent to 30. 6. 1974 This question has become C material since the rate of purchase tax was increased from 3% to 5% with effect from 1st  July, 1974.  Now it is not disputed in the present case that  the purchases  of goods  effected by the assessee prior to  30-6-74  were  last  purchases  within  the  State because the  goods purchased  which were in stock on 30-6-74 were subsequently  sold by  the assessee  in the  course  of inter-state trade or commerce Which means that they were not sold within the State and hence the assessee was clearly the last purchaser  within the  State and  as such was liable to pay purchase  tax under Item 71 of the First Schedule to the Kerala General  Sales Tax  Act. Equally it is clear that the assessee could  not be  made liable  to tax on the purchases made by  it prior  to 30th June 1974, unless s the purchases acquired the  quality of  being last purchases in the State. It was  pointed out by this Court in State of Madras v. Shri T. Naral  anaswami Naidu  & Anr.  [1967] 3 S. C. R. 622 when the assessee  ’ files  a return  and declares  the stock  in hand, the  stock in  hand cannot  be said  to have  been ac- quired by last purchase because he may still during the next assessment year, sell it or he may consume it himself or the goods may  be destroyed,  etc. He would be entitled to claim before the  assessing  authorities  that  the  character  of acquisition of  the stock  in hand  was undetermined; in the light of  subsequent vents it may or may not become the last purchase inside  the State." There can therefore be no doubt that the  assessee in  the present case became liable to pay tax on the purchases made by it prior to 30th June, 1974, as soon as  it became determined though subsequent to 30th June 1974, that  these purchases  were last  purchases inside the State and were consequently exigible to tax.      But the  question remains  as to  what is  the rate  at which 1076 the assessee  was liable  to be  taxed in  respect of  these purchases. Since  the purchases  took place before 30th June 1974, the assessee would, in our opinion, liable to be taxed at the  rate prevailing  at the time when the purchases were made and  since the  rate at  that time  was 3%  of the sale price, the  High Court was right in taking the view that the purchases made  by the assessee prior to 30th June 1974 were taxable at  the rate  of 3%. We may point out that a similar view has  been taken  by the  Kerala  High  Court  in  Seaso Rubbers v.  State of  Kerala, 48  S.  T.  C.  256.  We  find ourselves in  agreement with  the reasoning  adopted by  the Full Bench of the High Court in that case.      We accordingly  reject the  appeal but with no order as to costs.                                            Appeal dismissed. 1