TMI Blog1964 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ods are sold by the assessee thereafter in the course of inter-State trade or commerce, the tax shall be refunded to the assessee subject to certain conditions. We are not now concerned with this last mentioned provision for refund. Acting upon section 15(a) of the Central Sales Tax Act, the Government of Madras provided for the tax on declared goods, in section 4 of the Madras General Sales Tax Act, 1959, which states that tax in respect of declared goods shall be paid at the rate and only at the point specified against each in the Second Schedule on the turnover in such goods in each year, whatever be the quantum of turnover in that year. In the Second Schedule "cotton" is entered as item 2 and the single point of levy adopted is "at the point of last purchase in the State" and the rate of tax is one per cent. Adopting the interpretation to the words "last purchase in the State" given by the Kerala High Court in Abdulsalam Rowther v. State of Kerala[1961] 12 S.T.C. 98. and the Mysore High Court in Hormusji Hirjibhoy and Co. v. Commercial Tax Officer[1962] 13 S.T.C. 773., the assessing authority in this case levied sales tax on the unsold stock remaining with the assessee at the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly that of the Bombay High Court in Kishinchand Chellaram v. Commissioner of Income-tax [1956] 29 I.T.R. 993., Chagla, C.J., observed that it was difficult to understand on what principle of taxation law, could an assessee rely on a subsequent event in order to escape taxation which he was properly liable to pay as far as the assessment year itself was concerned. Adopting the view of these decisions, the Kerala High Court held that for fixing the stage of the single point levy in any given assessment year, the fact that the goods were sold subsequent to that year should not be taken into account. The Mysore High Court in Hormusji Hirjibhoy Co. v. Commercial Tax Officer[1962] 13 S.T.C. 773., dealt with a case where groundnuts, according to the Schedule in the Mysore Sales Tax Act, was to be assessed to sales tax, on the last purchase in the State. It was found that the dealer had sold after the expiry of the year of assessment, a certain quantity of groundnuts to another dealer, and he claimed at the time of assessment, that the turnover represented by this subsequent sale, should be excluded from his assessable turnover in the year of assessment. There was no allegation that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and high rates of assessment by different States. The successive sales of goods mark, therefore, successive stages in a chain. The stage of last purchase or last sale in a State will be reached just before the goods are caught up in the stream of export and go outside the State, or just before the goods find their way to a factory when they are manufactured into some other goods. It is clear that the term "last purchase in the State" is a compendious way of covering either of the above situations, viz., the stage before export outside the State, or the stage before consumption where the goods lose their identity by manufacture. In rare cases, as pointed out by Sri K. Rajah Iyer for the respondent, the goods themselves may be destroyed by fire or accident, and that may also mark a last stage of purchase or sale. But this contingency is very remote and need not be considered at all for our purpose. In our view, there is no scope for picking out a period of time limited by the year of assessment, in the course of the successive stages of sales and purchases in which a particular item of declared goods might be involved, and look only within that period of one year, for locating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumed in a factory. The taxable event in the case of cotton is the purchase, but the tax liability is attracted to it only when that purchase also satisfies the test of being at the stage of last purchase, which stage has to be decided not by the fact that the year of assessment comes to a close before another sale takes place, but the fact of export outside the State or consumption by a factory occurs thereafter. It appears to us, that there will be no difficulty in adhering to this principle for fixing single point levy, and at the same time adopt the requirement that while making an assessment in one year, it will not be proper to take into account an event that happens in another year. For example, let us take a case where a dealer has made a purchase of cotton on the 30th of March, 1960, and sells it to another dealer in the State on the 2nd of April, 1960. According to the view of the Kerala and Mysore High Courts the assessee would be liable to pay the tax on the purchase on the 30th of March as the last purchase in the assessment year ending 31st March, 1960, on the principle that the subsequent sale on the 2nd of April, 1960, is irrelevant, since it fell outside the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle laid down by the Kerala and Mysore High Courts, the Madras State Legislature has amended section 4 of the General Sales Tax Act, providing for a refund where a tax at the point of last purchase in the State has been levied and collected under the Act, in respect of goods liable to tax at such point, and where the said purchase ceases to be the last purchase in the State by reason of a subsequent purchase of such goods by another dealer in the State. The statement of objects and reasons with reference to the amendment, appearing in the memorandum appended to the Bill, mentions that the Government had decided with reference to "judicial decisions" that transactions in the assessment year should alone be taken into account to decide whether a dealer is the last purchaser or not, and under that system, goods purchased in a year are likely to be taxed at more than one point, if they are purchased by another dealer in the State in a subsequent year. Unfortunately for the dealer in this case this amendment came into force only on 1st April, 1963, and he cannot avail himself of its benefit. That apart, as the statement of objects and reasons mentioned above indicates, the amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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