1973 (7) TMI 73 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of sales tax law regarding the point of levy for declared goods under the Mysore Sales Tax Act, 1957. Application of the ruling in State of Madras v. Narayanaswami Naidu to determine tax liability for turnovers of groundnuts and cotton held in stock as of a specific date. Impact of Mysore Act 9 of 1970 amending the point of levy on the tax assessment. The validity of the argument that subsequent amendments should not affect tax liability for the relevant assessment year.

Analysis:
The judgment involves a batch of seven sales tax revision petitions by the State of Mysore concerning the interpretation of the Mysore Sales Tax Act, 1957. The central issue revolves around the point of levy for declared goods, specifically groundnuts and cotton, during the assessment period from 1st April, 1969, to 31st March, 1970. The key legal question was whether the turnovers of groundnuts and cotton held in stock by dealers as of 31st March, 1970, were subject to tax under section 5(4) read with Schedule IV of the Act before the amendment by Mysore Act 9 of 1970.

The Sales Tax Appellate Tribunal had ruled in favor of the dealers, following the precedent set by the Supreme Court in State of Madras v. Narayanaswami Naidu. In the Narayanaswami Naidu case, the Supreme Court had clarified that a dealer is not liable to pay tax on purchases until they acquire the quality of being the last purchases inside the State. This principle was applied to the present case, emphasizing that tax liability should be determined based on the law in force during the relevant assessment year.

The State, represented by the Senior Government Advocate, argued that subsequent amendments, specifically Mysore Act 9 of 1970, should impact the tax liability assessment. However, the court rejected this argument, emphasizing that tax liability must be determined based on the law applicable during the assessment period. Therefore, the stocks held by the dealers on 31st March, 1970, were not considered as the last purchases inside the State, aligning with the Tribunal's decision and the Supreme Court's interpretation.

Ultimately, the court dismissed the revision petitions, upholding the Tribunal's decision and affirming that the dealers were not liable to tax under the Act as it stood before the amendment by Mysore Act 9 of 1970. The judgment underscores the importance of applying the law in force during the relevant assessment period to determine tax liability for declared goods, in line with established legal principles and precedents.