YUSUF SHABEER Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE writ appeals arise from the judgment of Subramonian Poti, J. , dismissing a batch of original petitions. The decision is Malabar Fruit Products Company v. Sales Tax Officer, Palai, and Others ([1972] 30 S. T. C. 537; 1972 K. L. T. 246 ).

(2.) THE question that arose for decision was the validity of section 5a of the Kerala General Sales Tax Act, 1963, for short the Act. This section was inserted by an amendment effected to the Act by section 3 of Act 14 of 1970, which came into operation on 1st April, 1970. Section 5a (1), the relevant provision which has to be construed, is in these terms : " 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, and either - (a) consumes such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State; or (c) despatches them to any place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. "

(3.) COUNSEL for the appellant in Writ Appeal No. 51 of 1972, who led the arguments in this batch of cases contended that such a view was possible on the sections of the Madhya Pradesh General Sales Tax Act, but that the same view cannot be taken on the provisions of the Act. The reasons for this is said to be that under the Madhya Pradesh General Sales Tax Act there are two sections, sections 4 and 6, which provided separately for the incidence and levy of tax respectively whereas under the Act incidence and levy have been clubbed together and embodied in a single section, section 5 of the Act, which we may read : " 5. Levy of tax on sale or purchase of goods.- (1) Every dealer (other than a casual trader or agent of a non-resident dealer) whose total turnover for an year is not less than twenty thousand rupees and every casual trader or agent of a non-resident dealer, whatever be his total turnover for the year, shall pay tax on his taxable turnover for that year, - (i) in the case of goods specified in the First or Second Schedule, at the rates and only at the points specified against such goods in the said Schedule; and (ii) in the case of other goods, at the rate of three per cent at all points of sale : Provided that every dealer in cooked food including coffee, tea and like articles served in a hotel, restaurant or any other place, whose total turnover in respect of such food is not less than one lakh rupees shall pay tax at the rate of four per cent on his taxable turnover. (2) Every dealer other than a dealer referred to in sub-section (1) whose total turnover for a year in respect of the goods specified in the First or Second Schedule is not less than two thousand five hundred rupees shall pay tax at the rate and only at the point specified against the goods in the First or Second Schedule, as the case may be, on his taxable turnover in that year relating to such goods : Provided that where a tax has been levied under sub-section (1) or sub-section (2) of this section or under section 5a in respect of the sale or purchase of goods specified in the Second Schedule and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed. (3) Notwithstanding anything contained in sub-section (1) or sub-section (2), the tax payable by a dealer in respect of any sale of the goods mentioned in the First Schedule by such dealer to another for use by the latter as component part of any other goods mentioned in the said schedule, which he intends to manufacture inside the State for sale, shall be at the rate of only one per cent on the taxable turnover relating to such sale : Provided that the provisions of the sub-section shall not apply to any sale unless the dealer selling the goods furnishes to the assessing authority in the prescribed manner a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form. (4) Notwithstanding anything contained in sub-section (1), every dealer registered under sub-section (3) of section 7 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), shall, whatever be the quantum of his total turnover, pay tax for each year in respect of the sale of the goods with reference to the purchase of which he has furnished a declaration under sub-section (4) of section 8 of the aforesaid Central Act at the rate of three per cent of his taxable turnover in respect of the goods other than those specified in the First or Second Schedule : Provided that this sub-section shall not apply to any dealer in respect of the sale of the goods the purchase of which is liable to tax under sub-section (1 ). (5) Notwithstanding anything contained in sub-section (1) or sub-section (2), but subject to sub-section (6), where goods sold are contained in containers or are packed in any packing materials, the rate of tax and the point of levy applicable to such containers or packing materials, as the case may be, shall, whether the price of the containers or the packing materials is charged separately or not, be the same as those applicable to goods contained or packed, and in determining the turnover of the goods, the turnover in respect of the containers or packing materials shall be included therein. (6) Where the sale or purchase of goods contained in any containers or packed in any packing materials in exempt from tax, then, the sale or purchase of such containers or packing materials shall also be exempt from tax. Explanation.- In sub-section (5) and sub-section (6), the word 'containers' includes gunny bags, tins, bottles or any other containers. " It was argued that any tax can be imposed under the Act only if section 5 is satisfied. This was so before section 5a was introduced. Under this section sales of certain goods regarding which no tax was payable before the introduction of the section though the sale or purchase of such goods were generally taxable under the Act, were also made taxable in the hands of the dealer purchasing those goods provided the conditions of the section were satisfied. It is not possible to accept the argument that section 5a is subject to section 5. So what has to be ascertained is whether the sales of the particular goods are generally taxable under the Act and not whether the particular sales of those goods are taxable. The question to be posed is whether the Act imposes a tax on the sale or purchase of the goods which have been purchased by a dealer. If the Act purported to tax the sale or purchase of such goods, the further question may arise whether in given circumstances such sales could or could not be taxed. Our attention was drawn to the decision of the Madras High Court in M. K. Kandaswami and Others v. The State of Tamil Nadu and Others ([1971] 28 S. T. C. 227 ). With very great respect to the learned Judges we have to say that the decision has failed to give due weight to the words of the section "goods, the sale or purchase of which is liable to tax under the Act, in circumstances in which no tax is payable under the Act". Though the sale of the particular kind of goods are taxable, when the sale of the same goods is effected by a particular dealer, that particular sale by him may not be taxable. It is in those circumstances that section 5a would be attracted. The distinction between the sale of the particular goods being taxable under the Act and the particular sale of the same goods not being taxable has not been emphasised by the Madras High Court is clear from the following passage : " But, instead, the circumstances have been related by the section to sales or purchases which are liable to tax under the Act, but for some reason no tax is payable in respect of them. "