9911796707
TMI Blog1998 (1) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... N. Khare, J.- This civil appeal is directed against the judgment dated 26th June, 1992 passed by the High Court of Kerala. 2.. According to the appellant, it purchases arecanuts locally and after processing them dispatches the same to agents in the North Indian States for sale on consignment who effect sales according to the market trends and render accounts, sales statements to the appellant. Drafts or cheques for sale proceeds less expenses and commission are also sent simultaneously and the appellant has been paying sales tax for each month by working out the purchase value involved in the sales effected by the agents monthly. It is also stated that at the close of each financial year sometimes certain stocks of goods remain with the agents and the appellant pays sales tax on the purchase value of such stock in subsequent year as and when the stock is sold and the accounts of sales in respect thereof are received from the agents as the stock acquires the quality of last purchase only when the goods are sold. 3.. The final sales tax assessment of the appellant for the year 1987-88 was completed by an order dated November 30, 1989. While passing the assessment order the Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the State does not escape assessment, the State Legislature inserted an Explanation to section 2(xxvi) of the Act defining total turnover . The Explanation to section 2(xxvi) was added by Act No. 21 of 1978. The Explanation stated that, in the case of every dealer liable to tax under section 5 regarding the goods which are taxable at the point of last purchase in the State and which are held as a closing stock on the last day of a financial year, the amount for which such goods were purchased by the dealer shall be deemed also to be part of his turnover for the subsequent year or each of the subsequent years until such goods are either sold by him in the State or such purchase acquires the character of last purchase in the State in the hands of such dealers and in case such purchase acquires the character of last purchase in the State in the hands of such dealer, the turnover in respect of such purchase shall be liable to tax in the year in which the purchase acquires the character of last purchase. This indicates that the goods which are liable to tax as a last purchase point and form the closing stock of a year, shall be shown in the subsequent year as a part of total turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased by the dealer shall be deemed also to be a part of his total turnover for the subsequent year or each of the subsequent years until such goods are either sold by him in the State or such purchase acquires the character of last purchase in the State in the hands of such dealer and in case such purchase acquires the character of last purchase in the State in the hands of such dealer, the turnover in respect of such purchase shall be liable to tax in the year in which the purchase acquires the character of last purchase; ...................... 8.. Stage of levy of taxes in respect of imported and exported goods.-Where in the case of any goods tax is leviable at one point in a series of sales or purchases, such series shall,- (a) in the case of goods imported into the State either from outside the territory of India or from any other State in India, be deemed to commence at the stage of the sale or purchase effected immediately after the import of such goods; (b) in the case of goods exported out of the State to any place outside the territory of India or to any other State in India, be deemed to conclude at the stage of the sale or purchase effected immediately before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existing intermediary dealers may change themselves as agents of the last purchasers to avoid turnover tax. The commodities in respect of which this could happen are rubber, tea, pepper, arecanut and dried ginger. Government decided to amend the Act suitably so as to extend the liability to pay turnover tax to the taxable point also in respect of these items. According to clause (b) of section 8 of the Kerala General Sales Tax Act, 1963 the point of levy of purchase tax will conclude where the goods are exported outside the State. The Kerala High Court in its decision reported in [1986] 63 STC 387 has held that the closing stock of goods held outside the State will not acquire the character of last purchase till it is sold. Under the cover of this decision, many dealers claim that their stock of goods held outside the State will not acquire the character of last purchase until the goods are sold and as such they are not liable to pay tax on such goods. As a result, Government is losing huge amount of tax. To overcome this situation Government decided to amend the Act suitably. 10.. Having regard to the phraseology and the objects of the amending Act extracted above, it is ..... 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