The main legal point established is the interpretation of 'turnover' and 'sale' under the State Act and the application of clear definitions under the Central Act to determine tax liability and exemption for specific goods.

1. The petitioner was assessed by the respondent, the Sales Tax Officer, Tirur under the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the State Act) for the year 1963-64, as per order Ext. P-5 dated 318 1965. Exts. P-6 and P-7 both dated 23 21966, are notices of final assessment and demand issued by the respondent to the petitioner for payment of sales-tax and surcharge payable under Ext. P-5. This Original Petition has been filed to quash Exts. P-5, P-6 and P-7 and for other incidental reliefs.

2. The taxable turnover of the petitioner was fixed in Ext. P-5 at Rs. 5,41,541-80. This includes a sum of Rs. 57,684-04, which represents the value of the closing stock of the petitioner's business on 9 21964 plus 10 per cent thereon. The petitioner was carrying on a trade at Tirur and Calicut; and it is common case that he carried on this business only till 9 21964.On 10 21965. he formed a partnership with another person; and the whole stock in trade of his business was transferred to this partnership business. It is also not in dispute that the stock in trade thus transferred to the partnership formed part of bis capital in the firm. The stock in trade thus transferred to the firm was valued at Rs. 52,440.04 in the books of the firm The respondent treated this transfer as a sale of the goods to the firm, and added 10 per cent thereto for fixing the sale price. Apparently, this 10 per cent was added on account of profit which the petitioner would have made, if he sold his goods in the normal course. The petitioner objected to the inclusion of the aforesaid sum in his taxable turnover, on the ground that the transfer of the stock in trade of his business to the firm as contribution of his capital did not involve any sale of goods. He also claimed, that, if this amounted to sale within the meaning of the Act, he was entitled to deduction under R.9 (g) of the Kerala General Sales Tax R.1963 (hereinafter referred to as the Rules). The petitioner also raised another contention before the respondent, namely, the turnover as per his books of account consisted of sale price of certain goods, which are "oil-seeds" within the meaning of S.14 (vi) of the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act), and that he was not liable to tax on the sale of these goods, as he was not the first seller of the said goods in the State. He also contended that, under S.15 of the Central Act, the tax on the sale of the said goods should not, in any event exceed 2% of the turnover. "Oil-seeds" fall under Schedule II of the State Act; and they are liable to tax only at 2 par cent on the first sale in the State. Ext. P-5 shows that the respondent has given deduction in respect of some items for which the petitioner claimed exemption. In other respects, the aforesaid two contentions of the petitioner were not accepted by the respondent.

3. The learned counsel for the petitioner advanced before me the above two contentions for quashing the order of assessment, Ext. P-5. Regarding the second contention, he confined his submission only to 3 items, namely, gingelly seeds and mustard seeds. It may straightaway be said that, even if the petitioner succeeds in his contentions, Ext. P-5 is not liable to be quashed as a whole, because they affect only the assessability of a minor part of the total turnover; and there is no dispute regarding the assessability of the remaining turnover.

4. The first question for consideration is whether the value of the stock in trade of the petitioner's business, which was transferred into a partnership formed between the petitioner and another person, as contribution of the petitioner's capital in the firm, is "turnover" chargeable to tax under the State Act. S.5 is the charging section; and it imposes the tax on the total turnover of a dealer for a year. "Turnover" is defined in S.2 (xxvii) of the State Act as meaning the aggregate amount for which goods were either bought or sold, or