STATE OF MADRAS vs T. NARAYANASWAMI NAIDU AND ANR.

The Supreme Court ruled that under Sections 3 and 4 of the Madras General Sales Tax Act, a dealer is not liable to pay tax on purchases until they acquire the character of 'last purchases' as defined in the Second Schedule of the Act. The Court held that stock in hand cannot be considered as last purchase until its future disposition is determined, thus allowing the assessee's claim for deduction. The judgment of the Madras High Court was upheld, confirming the Sales Tax Appellate Tribunal's decision.