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TMI Blog1986 (11) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... evision cases only with the correctness or otherwise of the imposition of tax under section 5A of the Act on the purchases of these finished goods from unregistered dealers. The first appellate authority upheld the imposition of the tax under section 5A, but the Tribunal, on appeals, set aside the orders, and held the assessee to be not liable to tax in respect of the purchases. The Revenue has come up in revision. 2.. Section 5A(1) which is relevant reads as under: "5A. Levy of purchase tax.-(1) Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under section 5, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that decision, the High Court of Madras while dealing with similar provisions in the Tamil Nadu Act, held that by virtue of the explanation, such export sales, (where the goods were in the State either at the time when the contract was made or at any rate at the time when the appropriation was effected), were local sales, for purposes of section 7-A(1)(b) of the Tamil Nadu Act, (which corresponds to section 5A(1)(b) of the Kerala Act) and hence the purchases were not subject to levy of tax under section 7-A. The decision in Thangiah Nadar's case [1980] 46 STC 67 (Mad.) has not however, been accepted by this Court (vide the decision in Deputy Commissioner of Sales Tax v. Indian Oil Corporation Ltd. [1987] 64 STC 160; ILR (1986) 2 Ker 478. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat section. There is a further and more important condition precedent for the applicability of section 5A, namely, that the sale or purchase is in circumstances in which no tax is payable under section 5. The exigibility to purchase tax is dependent on a finding that the transaction was one in which no tax was payable under section 5. The goods in question were liable to tax at the sale point and were taxable at multi point. Non-payment of the tax on the sale may be due to various circumstances as pointed out by this Court in Malabar Fruit Products Co. v. Sales Tax Officer [1972] 30 STC 537 (paragraphs 27, 28 and 29). Sales tax may not be payable by the seller for the reason that he belongs to an exempted category of sellers, or for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 5. The authorities have therefore, necessarily to address themselves to this question whether the selling dealer is liable to tax under section 5 before imposing the liability under section 5A. 6. This Court had in the decision in Kerala Premo Pipe Factory Ltd. v. State of Kerala [1984] 57 STC 84, stated in a slightly different context: "Section 5A is intended to drag into the net of taxation transactions of purchase where such transactions are not liable to suffer tax in the hands of the seller and the goods do not return to the commercial stream for the purpose of being taxed. If goods purchased by a dealer are consumed or used in the manufacture of other goods no doubt the goods so manufactured are subjected to tax, but i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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