1986 (2) TMI 332 - HC - VAT and Sales Tax

Summary

Issues:
Validity of assessment under section 5A of the Kerala General Sales Tax Act, 1963 regarding (1) ivory purchased from the Travancore Devaswom Board, (2) purchase value of packing materials, and (3) purchase value of finished articles locally purchased and exported.

Analysis:

The judgment pertains to revisions against the Sales Tax Appellate Tribunal's order confirming the Appellate Assistant Commissioner's assessment orders for the periods 1972-73 and 1973-74. The issues revolve around the applicability of section 5A of the Act to ivory purchased from the Travancore Devaswom Board, packing materials, and finished articles locally purchased and exported. The Tribunal upheld the assessment that the purchase turnover of these items is subject to tax under section 5A.

The Court examined the purchase turnover of ivory from the Devaswom Board and concluded that it was not exigible to sales tax under section 5 at the point of sale by the Board. However, the purchase turnover would be taxable under section 5A if certain conditions are met. The Court determined that raw ivory used in manufacturing articles for export or local sale is liable to tax under section 5A, except for the quantity sold within the State.

Regarding packing materials, the Court differentiated between materials used for local sales, inter-State sales, and export. It held that materials used for export or consignment sales outside the State are subject to tax under section 5A, as they have not been taxed previously. The extent of taxability of packing materials was left for reconsideration by the assessing authority.

The judgment also addressed the purchase turnover of manufactured articles locally bought and exported. It ruled that such articles, purchased from non-dealers and not previously taxed under section 5, are subject to tax under section 5A. The Court cited previous decisions and Supreme Court rulings to support its interpretation of section 5A.

In conclusion, the Court set aside the orders related to the levy of purchase tax on packing materials and remanded the case for reassessment based on the judgment's directions. The Tribunal's decision was confirmed in all other aspects, with no costs awarded.

This detailed analysis highlights the Court's reasoning on the issues of assessment under section 5A concerning ivory, packing materials, and finished articles, providing a comprehensive overview of the judgment's findings and implications for the parties involved.