The commercial identity of the finished product and its component parts is crucial in determining the liability to tax under S.5(vii) of the General Sales Tax Act, 1125.

1. These two Tax Revision Cases raise a common question and have therefore, been heard together.

2. The revision petitioners are registered dealers conducting trade in articles of footwear made of rubber. The petitioner in T. R.C. 65/66 has her place of business at Kottayam while the petitioner in T.R.C. 125/66 conducts his trade in Ernakulam. They were assessed to tax by the respective Sales Tax Officers in respect of the turnover relating to the sale of rubber chappals and it is the legality of the assessment of such turnover that is questioned before us in these two revision easel.

3. it is common ground that the petitioners purchased the two component parts which went to make the chappals; namely, the foam rubber soles and the strap mouldings from manufacturers within the State and that Salts Tax had been levied on the sales of such parts effected by the manufacturer to the petitioners.

4. Under S.5(vii) of the General Sales Tax Act, 1125 (Act 11/1125) which is the relevant statute governing these cases, the sale of goods specified in column (2) of Schedule I shall be liable to tax only at such single point in the series of sales by successive dealers as may be specified by the Government by notification in the Gazette; and, where the taxable point so specified is a point of sale, the seller shall be liable for the tax on the turnover for which the goods are sold by him at such point. The following goods are mentioned as Item No. 5 in Schedule I: "Rubber products other than cycle tyres and tubes and rubber accessories of cycles", and the rate of tax in respect of them is specified as 7 per cent. By notification S. R. O. No. 100/62 the Government have specified the taxable point in respect of such goods as the point of first sale in the State by a dealer who is not exempt from taxation under S.3(3) of the Act.

5. The contention of the petitioners is that what has been sold by them as chappal is a rubber product on which tax has been already levied at the point of first sale within the State namely, the sales to them of the soles and strap mouldings by the manufacturers, and that therefore, the further sales effected by them of such rubber products are not liable to be taxed. In other words, their contention is that what has been sold by them as chappal is the same rubber product which has already been subjected to tax at the point of first sale within the State. The assessing authorities rejected this contention holding that even though the chappals sold by the petitioners were undoubtedly rubber products, they were not the same as the rubber products which had been previously subjected to tax at the point of first sale by the manufacturers. In the view of the assessing authorities, the finished product, namely the chappal, sold by the petitioners had a distinct commercial identity of its own, different from that of the soles and strap mouldings purchased by the petitioners and that therefore, it could not be said that the disputed turnover relating to sales of the same rubber product which had been purchased by the petitioners from the manufacturers under sales already subjected to tax. The assessing officers accordingly held that the sales of chappals effected by the petitioners were the first sales within the State of that particular commodity and were therefore, liable to be taxed. The assessments were confirmed by the Appellate Assistant Commissioners and also by the Sales Tax Appellate Tribunal whereupon the petitioners have approached this court by these Tax Revision Cases.

6. The learned counsel for the petitioners contended that the chappals sold by his clients being admittedly rubber products, they are covered by item 5 of the first schedule to the Act and that therefore, the turnover relating to the sales of chappals by his clients should not have been subjected to taxation since the sales effected by his clients were not the first sales of the particular goods within the State. The argument is that the ch