MONCOMPU EGG STORES Vs. STATE OF KERALA

JUDGEMENT

(1.) The revision petitioner is a dealer in eggs. The eggs are sold by the revision petitioner in interstate commerce. Necessarily the eggs have to be sent properly packed. That calls for purchase of packing materials such as baskets, coir, straw and sticks. These are purchased by the petitioner from parties outside the State and it is agreed that no tax has been paid on the sales effected to the petitioner in respect of packing materials. The eggs sold by the revision petitioner is exempt from tax under the Central Sales Tax Act. The tax under Kerala General Sales Tax Act was sought to be imposed in respect of the purchase turnover of the packing materials. It was so imposed by the order of the assessing authority despite the objection by the assessee that the turnover of the packing materials ought not to be taxed under S.5A of the Kerala General Sales Tax Act. Two reasons were urged by the assessee. The first was that under S.5(6) of the Kerala General Sales Tax Act if the commodity sold is exempt the container sold must also be exempt. The second contention was that S.5A(1)(c) operates to render the purchases not taxable in case the goods so purchased are despatched to any place outside the State in the course of interstate trade or commerce. These pleas did not get the acceptance of the Sales Tax Officer or the Appellate Assistant Commissioner. The Appellate Tribunal also did not accept these and hence the assessee has come up in revision.

(2.) S.5(6) of the Kerala General Sales Tax Act may not help the revision petitioner for it may operate to save the tax when tax is levied at sale point on packing material and for any goods which are taxable at the sale point tax is attempted to be levied at the sale point. The other contention alone needs examination.

(3.) Under S.5A a dealer, who purchases from a registered dealer or from any other person goods, the sale or purchase of which is liable to tax under the Act, in circumstances in which no tax is payable under S.5 has to pay tax on the taxable turnover relating to such purchase if one of the three conditions mentioned in Clauses (a), (b) and (c) of sub-s.(1) of S.5A is shown, that is, he should have either consumed the goods in the manufacture of other goods for sale or otherwise, or he should have disposed of such goods in any manner other than by way of sale in the State, or he should have despatched the goods to places outside the State except as a direct result of sale or purchase in the course of interstate trade or commerce. Evidently the purpose of S.5A is to meet any possibility of evasion of tax in cases where goods, the sale or purchase of which is liable to tax, when such sale or purchase happens to be in circumstances in which no tax is payable under S.5. In such a case in the bands of the purchaser tax is levied under S.5A. That again would be only if the goods would not come back into the stream of trade in the State. If it is sold again in the State then of course there is no question of tax being avoided. The three instances mentioned in Clauses (a), (b) and (c) are instances where goods are disposed of in a manner otherwise than by a taxable sale in the State. Where goods are consumed in the manufacture of other goods the commodity which was purchased for such manufacture could no longer be sold as such, in such a case S.5A is attracted. Where otherwise than by sale the goods are disposed of the same result would follow. Where it is despatched outside the State also the result would be the same; the State would lose the tax. But in Clause (c) there is an exception, namely, where despatches to any place outside the State as a direct result of sale or purchase in the course of interstate trade or commerce. When the goods are in the interstate stream of trade or commerce there is no question of invoking S.5A.