1990 (11) TMI 387 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the constitutionality of sections 5, 5A, and 8 of the Kerala General Sales Tax Act, 1963.
2. Assessment order passed against the petitioner for the year 1980-81.
3. Tax levy on consignment transfer of goods from Kerala State to other states.
4. Interpretation of section 8 of the Act regarding the last purchase point.
5. Validity of section 5A and its compliance with constitutional provisions.
6. Taxability of closing stock under the Act.
7. Comparison with relevant legal precedents.
8. Impact of Supreme Court judgments on the case.

Analysis:
The petitioner challenged the constitutionality of sections 5, 5A, and 8 of the Kerala General Sales Tax Act, 1963, specifically regarding the levy of sales tax on consignment transfer of goods from Kerala to other states. The assessing authority invoked section 8 to tax goods exported outside Kerala, deeming them as the last purchase. The court upheld the tax levy under section 5A, stating it was not discriminatory and complied with constitutional provisions, citing relevant legal precedents.

The petitioner contended that the tax on closing stock was unsustainable, relying on a Supreme Court decision. However, the court rejected this argument, holding that closing stock, whether within or outside the State, is not includible for taxation. The court also addressed the impact of the Supreme Court judgment in Goodyear India Ltd. case, emphasizing that the taxable event was the consignment of goods, not the purchase itself.

Regarding the interpretation of section 8, the court held that the section fixed the taxable point at the last purchase before the export of goods, falling under List II of the Seventh Schedule to the Constitution. The court dismissed the petitioner's argument that sections 5, 5A, and 8 were illegal, emphasizing their compliance with legal provisions and precedents. The court also highlighted the legislative amendments to the Act, further supporting the validity of the tax levy on consignment transfers.

In conclusion, the court found no merit in the writ appeal and dismissed it, affirming the legality and constitutionality of sections 5, 5A, and 8 of the Kerala General Sales Tax Act, 1963. The judgment provided a detailed analysis of the legal issues raised by the petitioner, addressing each point with reference to relevant legal precedents and constitutional provisions.