E J MATHEW Vs. STATE OF KERALA

JUDGEMENT

(1.) These appeals by special leave are from judgments of the High court of Kerala, the main point involved being the liability of the appellant to payment of additional sales tax under section 3 (2) of the General Sales Tax Act (Act No. 11 of 1125 M. E. ) (originally Travancore-Cochin Act of 1950) as amended in 1951, hereinafter called "the Act", in respect of sales of tobacco made by the appellant in the erstwhile State of Travancore-Cochin out of purchases from dealers outside that State for the assessment years 1953-54 and 1954-55.

(2.) The assessee, who is the appellant, was a dealer in tobacco at Trivandrum in the erstwhile State of Travancore-Cochin during the years mentioned above. He made purchases of tobacco from dealers outside that State. The assessing authority as also the Appellate Assistant Commissioner of Sales Tax held that the assessee was liable to be taxed under section 3 (2) of the Act because the sales made to him by the non-resident dealers were not covered by the explanation to article 286 (l) (a) of the Constitution as it stood before the passing of the Constitution (Sixth Amendment) Act, 1956. The assessee filed appeals before the Sales Tax Appellate tribunal. The tribunal agreed with the view of the departmental authorities that the assessee was liable to pay the tax and dismissed the appeals. The assessee filed tax revision petitions before the High court of Kerala which were also dismissed. Thereafter the assessee sought special leave under article 136 of the Constitution which was granted.

(3.) The charging section 3, at the relevant time, read as follows : "3. Levy of taxes on sales of goods.- (1) Subject to the provisions of this Act (a) Every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every Indian rupee in such turnover. (2) Subject as aforesaid, the sale of any of the goods mentioned below shall be subject to a tax at the rate specified in respect thereof, at such single point in the series of sales by successive dealers as may be prescribed; and the tax shall be paid by the dealer concerned on his turnover in each year relating to such goods, and shall be in addition to the tax to which he is liable under Ss. (1) on his total turnover for the year. SI. No. Description of the goods Rate of tax (ix) Tobacco 10 annas (3) A dealer whose total turnover in any year is less than ten thousand Indian rupees shall not be liable to pay any tax for that year under Ss. (1) or Ss. (2). (4) For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed. (5) The taxes under Ss. (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed: Provided that (i) in respect of the same transaction of sale, the buyer or the seller but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him. (6) Subject to such rules as may be prescribed, the assessing authority may assess a dealer for any year as if his transactions in such year had been the same as in the previous year. " Rule 6 of the Travancore General Sales Tax Rules, 1950, hereinafter called the Rules, was in these terms : Rule 6 : "the sale of any of the goods mentioned in items (i) to (ix) in section 3, Ss. (2) , shall be subject to the tax specified in that Ss. at the stage of sale by the person who in the State is the first dealer in such goods, who is not exempt from taxation under section 3 (3). "