CARMEL BOOK STALL versus DY. COMMISSIONER OF SALES TAX

Citation: [1994] SUPP. 2 S.C.R. 274 · Decided: 26-07-1994 · Supreme Court of India · Bench: K. RAMASWAMY, N. VENKATACHALA · Disposal: Appeal(s) allowed

Judgment (excerpt)

' . 
A 
CARMEL BOOK STALL 
v. 
DY. COMMISSIONER OF SALES TAX 
JULY 26, 1994 
B 
[K. RAMASWAMY AND N. VENKATACHALA, JJ.] 
Kera/a General Sales Tax Act, 1963-Section ll>-£xigibility to ~ax--Ex­
emption u/s J(}-f'rofits out of sale of specified goods to be solely utilised for 
charitable pwpose-Onus of proof on assessee-Utilisation of profits need not 
C be proved in respective assessment yea,--!' act to be proved before assessment 
order is passed. 
For the assessment year 1981-82 and 1982-83, the Sales Tax Officer 
assessed to sales tax the income deriVed by the appellant from the sales of 
the books excluding the income actually utilised for charitable purpose. 
D On appeal, the Appellate Assistant Commissioner confirmed that order. 
In further appeal, the Tribunal .-eversed the decisions of the Authorities 
and held that the entire Income derived during the assessment years went 
towards utilisation of charitable purpose and, therefore, remitted the 
matter to the Sales Tax Officer for reconsideration. On· revision, the High 
E Court held that though the burden was on the assessee to establish that 
the income derived by /Sale of books during the assessment years was 
utilised during that year for charitable purpose, the assessee did not 
discharge that l!urden ·and that, therefore, the appellant was not entitled 
to the exemption. Accordingly, it allowed the revision. 
' 
F 
In this appeal the assessee contended that tlie High Court was in 
error in its conclusion that the appellant has to prove that it had utilised 
the income derived for charitable purpose, in the respective assessment 
years. It was urged that when the assessment could not have been com· 
pleted during the relevant assessment year, utilisation of income may spill 
G over or set apart to the subsequent years. It was also <ontended that if the 
income derived had been set apart or utilised for charitable purpose, i.e. 
stock in trade and proved to have been nsed for that purpose, the assessee 
would be entitled to the exemption under Section 10 of the Kerala General 
Sales Tax Act. 
H 
On the questions arise for consideration of Supreme Court, whether 
274 
CHARMEL BOOKSTALL v. DY. COMMR. OF SALES TAX 
275 
the appellant is required to prove that the income derived from the sale A 
or the books was utilised for charitable purpose aud, whether the amount 
should be utilised during that assessment year alone and the assessee 
would be entitled to set apart the income for Utilisation for charitable 
purpose before the assessment year is completed : 
Allowing the matter and remitting the matter back to the Sales Tax 
Officer, this Court 
HELD : 1.1. It is for the assessee to prove, as a fact, that the profits 
derived by the sale of the goods specified in the Schedule, had been utilised 
solely for charitable purposes and on proof thereof that much or the 
amount would get exempted from exigibility to tax. [280-B] 
B 
c 
1.2. Regarding the question whether the assessee should utilised the 
profits in the relevant assessment year itself, the Government in their 
subsequent notification dated November 3, 1993 in SRO No. 1727/93 had 
clarified that utilisation of the profits may be done during the relevant year D 
or be set apart for charitable purpose, if not utilised. But, however, before 
the assessment order is passed, there should be proor that the profits 
derived in the relevant assessment year have been solely utilised for 
charitable purpose. The direction in the notification to set apart the profits 
for charitable purpose would become meaningful when the above inter-
E 
pretation is adopted and at the same time the object or the notification 
gets achieved. [279-B-D] 
1.3. On the point that on the basis of the object or the articles of the 
charitable trust of the assessee, they were entitled to utilise the profits 
derived by the sale of the books in acquiring the stock in trade also, the F 
necessary material has not been placed. The assessee should be given an 
opportunity to prove that the profits derived during the relevant assess-
ment years have been solely utilised for charitable purpose. [280-C-D] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5064-65 G 
of 1989. 
From the Judgment and Order dated 20.2.89 of the Kerala High 
Court in T.R.C. 213 & 214 of 1987. 
V. Ramachandran and K.J. John for the Appellant. 
H 
276 
SUPREME COURT REPORTS [1994] SUPP. 2S.C.R. 
A 
A.S. Nambiar and M. A. Firoz for the Respondent. 
B 
c 
The following O

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