2006 (8) TMI 535 - HC - VAT and Sales Tax

Summary

Issues:
Whether theft of an article after purchase entitles the assessee for exemption from payment of tax at the point of last purchase in the State.

Analysis:
The judgment delivered by the Kerala High Court addressed the issue of whether theft of an article after purchase would exempt the assessee from paying tax on the commodity taxable at the point of last purchase in the State. The case involved the theft of rubber from the respondent's godown after purchase, with the contention that the item had not acquired the quality of last purchase due to the possibility of resale if the theft had not occurred. The Tribunal accepted this contention, leading to the State filing a sales tax revision case against the decision.

Upon hearing arguments from both parties, the Court disagreed with the Tribunal's logic, emphasizing that once goods are lost from the custody of the assessee, they are no longer available for resale, thereby acquiring the quality of last purchase. The Court referred to a previous decision where it was held that goods lost due to fire would attract tax if the item is taxable at the point of last purchase. The Court rejected the argument that loss in fire is permanent while loss in theft is not, stating that if lost goods are retrieved, double taxation could be avoided. However, if goods are not retrieved, the situation is akin to loss in fire, justifying the levy of tax on the respondent/assessee as rubber is taxable at the point of last purchase in the State.

In conclusion, the Court allowed the sales tax revision, overturned the Tribunal's decision, and reinstated the assessment on the turnover of the lost goods. The judgment clarified that the item, upon being lost, acquires the quality of last purchase, warranting the rightful imposition of tax on the respondent/assessee in this case.