1964 (8) TMI 60 - HC - VAT and Sales Tax

Issues Involved:

1. Interpretation of "last purchase in the State" for the purpose of single point levy under the Madras General Sales Tax Act, 1959.
2. Applicability of decisions from Kerala and Mysore High Courts.
3. Impact of assessment year on determining the last purchase.
4. Legislative amendments and their implications on the case.

Issue-wise Detailed Analysis:

1. Interpretation of "last purchase in the State" for the purpose of single point levy under the Madras General Sales Tax Act, 1959:

The core issue revolves around the interpretation of the term "last purchase in the State" as mentioned in the Second Schedule of the Madras General Sales Tax Act, 1959. The court emphasized that this term should be understood in the context of the legislation for single point levy. Section 15 of the Central Sales Tax Act mandates that the State law should levy sales tax at only one stage. The court clarified that the "last purchase in the State" should refer to the final purchase before the goods are either exported outside the State or consumed in a factory. This interpretation ensures that the price of the goods is not unduly increased by multi-point taxation at different stages.

2. Applicability of decisions from Kerala and Mysore High Courts:

The court reviewed the decisions of the Kerala High Court in Abdulsalam Rowther v. State of Kerala and the Mysore High Court in Hormusji Hirjibhoy & Co. v. Commercial Tax Officer. Both these decisions held that for the purpose of single point levy, the year of assessment should be considered as a self-contained period, and the last purchase within that year should be taxed. However, the Madras High Court did not accept this view. The court reasoned that such an interpretation would lead to multi-point taxation, which is contrary to the principle of single point levy intended by the legislation.

3. Impact of assessment year on determining the last purchase:

The court discussed the implications of limiting the assessment to transactions within the assessment year. It highlighted that such an approach could result in multiple taxations of the same goods if they are sold in successive years. The court provided examples to illustrate that confining the assessment to the year-end would not accurately reflect the stage of the last purchase. The court stressed that the taxable event and the stage for tax exigibility should be considered together, even if they occur in different assessment years.

4. Legislative amendments and their implications on the case:

The court acknowledged that the Madras State Legislature had amended section 4 of the General Sales Tax Act to provide for a refund where a tax at the point of last purchase in the State has been levied and collected, and the said purchase ceases to be the last purchase due to a subsequent purchase by another dealer in the State. However, this amendment came into force on 1st April, 1963, and was not applicable to the assessment year in question. The court noted that the amendment was intended to address the principles laid down in the Kerala and Mysore High Court decisions, which the Madras High Court found to be flawed.

Conclusion:

The court concluded that the assessment of the disputed turnover based solely on the unsold stock at the end of the assessment year, without considering the stage for single point levy, was improper. The court confirmed the order of the Sales Tax Appellate Tribunal and dismissed the revision. The same principle was applied to T.C. No. 125 of 1963, and the revision case was also dismissed.

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