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TMI Blog1967 (4) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in contending that he was entitled to claim deduction in respect of the value of the stock of ₹ 2,27,250 as being the purchases other than last purchases of cotton. - Civil Appeal No. 633, 634 of 1966, - - - Dated:- 12-4-1967 - SHAH J.C. AND SIKRI S.M. JJ. S.T. Desai, Senior Advocate (G.L. Sanghi for J.B. Dadackanji and Co., with him), for the respondent. G. Ramanujam and A.V. Rangam, for the appellant. -------------------------------------------------- The judgment of the Court was delivered by SIKRI, J. -These appeals by special leave are directed against the judgment of the Madras High Court in Tax Cases Nos. 105 and 125 of 1963. The High Court by its common judgment dated August 11, 1964, confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the revision. The State of Madras having obtained special leave, the appeal is now before us. The learned counsel for the appellant, Mr. Ramanujam, urges that the decision of the Kerala High Court in Abdulsalam Rowther v. State of Kerala(1) and of the Mysore High Court in Hormusji Hirjibhoy v. Commercial Tax Officer [1962] 13 S.T.C. 773. laid down the law correctly, and the Madras High Court erred in dissenting from these decisions in the present case (now reported as State of Madras v. T. Narayanaswami Naidu [1965] 16 S.T.C. 29.). Section 4 of the Madras Act provides: "4. Notwithstanding anything contained in section 3, the tax under this Act shall be payable by a dealer on the sale or purchase inside the State of declared goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods inside the State shall not exceed two per cent. of the sale or purchase price thereof, and such tax shall not be levied at more than one stage." Section 4 of the Madras Act was intended to comply with section 15 of the Central Act. The relevant portion of section 3 of the Madras Act, on which the learned counsel for the appellant relies, provides: "3. (1) Every dealer (other than a casual trader or agent of a non- resident dealer) whose total turnover for a year is not less than ten thousand rupees and every casual trader or agent of a non-resident dealer, whatever be his turnover for the year, shall pay a tax for each year at the rate of two per cent. of his taxable turnover." Section 2(p) defines "taxable turnover" to mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the assessee holding the stocks is the last purchaser in the State. In our opinion, this reasoning is fallacious. It is true that sections 3 and 4 speak of "a year", i.e., the financial year, and it is only the turn- over during that year that is liable to taxation in the hands of the assessee, but section 4 has to be read with the Second Schedule, and reading section 4 with the Second Schedule, it seems to us clear that a dealer is not liable to pay a tax on the purchases until the purchases acquire the quality of being the last purchases inside the State. In other words, when he files a return and declares the stock in hand, the stock in hand cannot be said to have been acquired by last purchase because he may still during the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Hormusji Hirjibhoy v. Commercial Tax Officer [1962] 13 S.T.C. 773., the Mysore High Court also seems to have been impressed by similar considerations. The judgment under appeal draws a distinction between taxable event and a stage at which the levy of tax in the case of declared goods is subject to single point levy. This may cause confusion, and indeed, the High Court gives one illustration, which it found unnecessary to deal with. The illustration given is: "One can visualise a case, for example, where goods mentioned above purchased on the 30th of March, 1960, may be exported by the purchaser himself outside the State on the 2nd of April, 1960. In that case the goods could not be assessed in 1960-61 in the hands of the exporting pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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