By C. B. Thakar Advocate ; G. G. Goyal, Janak Vaghani Chartered Accountants
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Sales Tax- Goods Return – Return of Medicines Sold by Retailer on Expiry- Beyond Prescribed Period of Three Months-Not Allowed-It is Not Unfructified Sale, Rule.9(1)(b) of The Kerala General Sales Tax Rules, 1963.
Facts
The petitioner company, the manufacturer of medicines, sold medicines in the State of Kerala to retailers through distributors. As per trade practice followed by all manufacturers, the company took back from the retailers through distributors, the unsold medicines after its expiry and destroyed by the company later. During the assessment for the period 2001-02 and 2002-03, the company claimed deduction from turnover of sales for such return of goods as goods return. The assessing authority disallowed the claim of goods return being beyond prescribed period of three months from the date of sale as provided in Rule 9(1)(b) of The Kerala General sales Tax Rules, 1963. The disallowance was also confirmed by the Tribunal. The Company filed revision petition filed before the Kerala High Court against the decision of tribunal.
Held
The Kerala Sales Tax Act or Rules do not provide any specific provision for grant of refund or adjustment of tax paid in respect of sale of medicines which have lost potency at the hands of dealer and which have been collected and destroyed by the manufacturer company. The only provision for deduction under the Rule is deduction for sales return within the prescribed period of three months from the date of sale. Since the goods are not returned within the prescribed periodthe deduction for sales return is not permissible.
The High Court also did not accept the alternate plea of the company that the transaction should be treated as unfructified sales. However, the High Court felt that this is a genuine problem of the medicines dealers which State has to address. In the result the revision petition filed by the company was dismissed.
