9911796707
TMI Blog1978 (8) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall, whatever be the quantum of the turnover relating to such purchase for a year, pay tax on the taxable turnover relating to such purchase for that year at the rates mentioned in section 5. (2) Notwithstanding anything contained in sub-section (1), a dealer (other than a casual trader or agent of a non-resident dealer) purchasing goods, the sale of which is liable to tax under section 5, shall not be liable to pay tax under sub-section (1) if his total turnover for a year is less than twenty-five thousand rupees: Provided that where the total turnover of such dealer for the year in respect of the goods mentioned in clause (i) of sub-section (1) of section 5 is not less than two thousand five hundred rupees, he shall be liable to pay tax on the taxable turnover in respect of those goods. (3) Notwithstanding anything contained in the foregoing provisions of this section, a dealer referred to in sub-section (1), who purchases goods the sale of which is liable to tax under clause (ii) of sub-section (1) of section 5, and whose total turnover for a year is not less than twen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/TD dated 30th November, 1972 (S.R.O. No. 658/72), has been issued, which is as follows: "In exercise of the powers conferred by section 10 of the Kerala General Sales Tax Act, 1963 (15 of 1963), the Government of Kerala, having considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act by any dealer on the sale of polished synthetic gems, whether they are sold loose or as part of any article in which they are set." In pursuance of these provisions, counsel for the assessee contended that the effect of section 5A read with the exemption granted under section 10 would be to make the sale or purchase one which is not liable to tax under the Act. Alternatively, it was contended that even if the operation of the exemption does not have the effect of nullifying the liability under the Act, the sale or purchase must be regarded as "in circumstances in which no tax was payable" under the latter part of section 5A(1) of the Act. Either way, it was claimed, that the provisions of section 5A would operate in favour of the assessee to relieve him from liability to tax. Counsel for the assessee relied upon the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 7-A read with section 17(1) of the Tamil Nadu General Sales Tax Act, almost similarly, if not identically, worded, the Supreme Court also came to the conclusion that the effect of a provision for exemption coupled with the provision making the tax exigible would be to nullify liability and to lead to the conclusion that the goods in question are not liable to tax. Section 7-A of the Act there construed was practically the same as section 5A of our Act. The Court observed: "We are unable to accept this interpretation which would render section 7-A(1) wholly nugatory. With due respect, it seems to us that in arriving at this erroneous interpretation, the learned Judge mixed up the concept of goods liable to tax with the transactions liable to tax under the Act. The scheme of the Act involves three inter-related but distinct concepts which may conveniently be described as 'taxable person', 'taxable goods' and 'taxable event'. All the three must be satisfied before a person can be saddled with liability under the Act. Nevertheless, the distinction between them, if overlooked, may lead to serious error in the construction and application of the Act. 'Goods' is defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods are not available for taxation, owing to the act of the dealer in (a) consuming them in the manufacture of other goods for sale or otherwise, or (b) despatching them in any manner other than by way of sale in the State, or (c) despatching them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce." The decision seems to be directly in favour of the assessee. But the learned Government Pleader contended that on the language of the section, there is a difference between non-liability to tax under the Act and an exemption from liability in pursuance of its provision. This may well be so. But the combined effect of a provision imposing liability to tax and of one granting exemption from the said liability is, for all practical purposes, to hold that there is no liability to tax under the Act. This view is what prevailed with the learned Judge of this Court in Malabar Fruit Products Company v. Sales Tax Officer, Palai[1972] 30 S.T.C. 537; 1972 K.L.T. 246., and with the Supreme Court in State of Tamil Nadu v. M.K. Kandaswami[1975] 36 S.T.C. 191 (S.C.). 2.. The learned Government Pleader stressed the distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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