C.T. KOCHOUSEPH versus STATE OF KERALA AND ANOTHER ETC.

Citation: [2025] 6 S.C.R. 310 · Decided: 08-05-2025 · Supreme Court of India · Bench: SANJIV KHANNA · Disposal: Dismissed

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Judgment (excerpt)

[2025] 6 S.C.R. 310 : 2025 INSC 661
C.T. Kochouseph 
v. 
State of Kerala and Another Etc.
(Civil Appeal No(s). 941-945 of 2004)
09 May 2025
[Sanjiv Khanna CJI,* Sanjay Kumar and R. Mahadevan, JJ.]
Issue for Consideration
Issue arose whether the purchase tax, as imposed by s.5A of the 
Kerala General Sales Tax Act, 1963 or s.7A of the Tamil Nadu 
General Sales Tax Act, 1959, is a tax in the nature of manufacture 
or consignment tax or an inter-state levy, and thus, ultra vires 
the Constitution and beyond the legislative powers of the state 
legislature; whether the purchase of goods by the appellants from 
dealers exempted from payment of tax by virtue of notifications 
or exemptions issued under the Kerala Act or Tamil Nadu Act is 
a purchase “which is liable to tax” within the meaning of s.5A of 
the Kerala Act or s.7A of the Tamil Nadu Act; and whether the 
appellant-assessee who had purchased goods, that were exempt 
from payment of sales tax or from the dealers who were exempt 
from payment of sales tax, liable to pay purchase tax u/s.5A of 
the Kerala Act or s.7A of the Tamil Nadu Act.
Headnotes†
Kerala General Sales Tax Act, 1963 – s.5A – Tamil Nadu 
General Sales Tax Act, 1959 – s.7A – Levy of purchase 
tax – Constitutional validity of purchase tax under the Acts – 
Purchase tax, as imposed by s.5A of the Kerala Act or s.7A of 
the Tamil Nadu Act, is a tax in the nature of manufacture or 
consignment tax or an inter-state levy – Purchase of goods 
by the assessee from dealers exempted from payment of tax 
under the Kerala Act or Tamil Nadu Act, if a purchase “which 
is liable to tax” within the meaning of s.5A of the Kerala Act 
or s.7A of the Tamil Nadu Act – Assessee who had purchased 
goods, that were exempt from payment of sales tax or from 
the dealers who were exempt from payment of sales tax, if 
liable to pay purchase tax:
* Author
[2025] 6 S.C.R. 
311
C.T. Kochouseph v. State of Kerala and Another Etc.
Held: Constitutional validity of s.7A of the Tamil Nadu Act and s.5A 
of the Kerala Act upheld – Levy of purchase tax is governed by the 
provisions and stipulations of ss.5A or 7A – They are independent 
and in a way constitute charging sections – ss.5A or 7A, impose 
purchase tax specifically in situations where the seller is granted 
exemption from payment of tax – Exemption from payment of tax 
at the time of sale is a pre-condition for attracting ss.5A and 7A 
respectively – It cannot be said that s.7A of the Tamil Nadu Act 
and s.5A of the Kerala Act would have no application when tax 
is exempt at the hands of the seller, or for that matter, the tax 
u/s.3 or s.5 of the Acts at the hands of the seller is payable at 
the point of first sale – The fact that the goods were not exempt 
from payment of tax at the time of sale and the goods would have 
attracted tax at the first point of sale, is immaterial – Purchase 
tax is leviable on and payable by the purchaser – However, the 
legislations do not levy the purchase tax to tax the transaction 
of the sale and purchase twice – Instead, it levies purchase tax 
only where no sales tax was payable on the sale – Purchase 
tax is levied on the purchase of goods on which no tax has 
been paid on account of any exemption as a result of which 
the seller is not required to collect and pay sales tax – Decision 
whether or not to levy purchase tax is a prerogative and power 
of the State Legislature – It cannot be said that purchase tax is 
leviable when there is cross- border or inter-State movement of 
the goods or is a consignment tax – What is granted is exemption 
from payment of sales tax and not the purchase tax – Grant of 
exemption being for the purpose of payment of sales tax, it does 
not follow that purchase tax would not be payable when conditions 
of s.7A are satisfied – Furthermore, it cannot be said that the 
applicable rate of tax on purchase would be nil as the tax payable 
on the sale in view of the exemption from payment of sales 
tax is nil – Thus, the judgments /orders of High Courts upheld.  
[Paras 31, 32, 35, 37-39]
Case Law Cited
State of Tamil Nadu v. M.K.Kandaswami and Others [1976] 1 SCR 
38 : (1975) 4 SCC 745; Hotel Balaji and Others v. State of A.P. and 
Others [1992] Supp. 2 SCR 182 : (1993) Supp. 4 SCC 536; Devi 
Dass Gopal Krishan Pvt. Ltd. and Others v. State of Punjab and 
Others [1994] 3 SCR 417 : (1994) Supp. 2 SCC 59 – relied on.
312
[2025] 6 S.C.R.
Supreme Court Reports
Kailash Nath and Another v. State of Uttar Prade

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