1999 (9) TMI 784 - SC - VAT and Sales Tax

Supreme Court clarifies tax jurisdiction on purchases from non-registered dealers under Sales Tax Act

Assistant Commissioner (Intelligence) Versus Nandanam Construction Company

The Supreme Court addressed jurisdiction under the Andhra Pradesh General Sales Tax Act, 1957, in a case involving purchases from non-registered dealers. ... Whether the respondents who purchased goods from persons other than registered dealers fall within the scope of section 6-A of the Act? Held that:- Appeal allowed. Once the goods are utilised in the construction of buildings the goods cease to exist or cease to be available in that form for sale or purchase so as to attract the tax and, therefore, the correct meaning to be attributed to the said provision would be that tax will be attracted when such goods are consumed in the manufacture of other goods or are consumed otherwise. Therefore, while agreeing with the view in Ganesh Prasad Dixit [1969 (2) TMI 128 - SUPREME COURT OF INDIA] on this aspect, we overrule to this extent the view expressed in Pio Food Packers [1980 (5) TMI 30 - SUPREME COURT OF INDIA] Issues:Jurisdiction of assessing under the Andhra Pradesh General Sales Tax Act, 1957.Interpretation of Section 6-A of the Act regarding the levy of tax on turnover relating to the purchase of certain goods.Conflict between decisions in Ganesh Prasad Dixit v. Commissioner of Sales Tax and Deputy Commissioner, Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers.Applicability of the provisions of section 6-A(ii)(a) of the Act to the consumption of original goods in the manufacture of other goods for sale or consumption of original goods otherwise.Analysis:The Supreme Court addressed the issue of jurisdiction under the Andhra Pradesh General Sales Tax Act, 1957. The respondents, engaged in building flats and houses, purchased materials like sand, bricks, and granite from non-registered dealers, which had not suffered any sales tax. The Assistant Commissioner of Commercial Taxes issued notices to produce accounts related to purchases, leading to writ petitions questioning the jurisdiction of assessment under the Act.Regarding the interpretation of Section 6-A of the Act, the Court focused on whether the respondents, who purchased goods from non-registered dealers, fell within the scope of this section. The key contention was whether the goods purchased, like sand and bricks, were consumed in the manufacture of other goods for sale. The Court analyzed the provisions of Section 6-A(ii)(a) and the conflicting decisions in Ganesh Prasad Dixit and Pio Food Packers to determine the applicability of the tax.The Court deliberated on the conflicting interpretations of the provision under Section 6-A(ii)(a) of the Act. It considered the consumption of original goods in the manufacture of other goods for sale or otherwise. By analyzing previous judgments and the legislative intent, the Court concluded that tax would be attracted when goods are consumed in the manufacture of other goods or consumed in any other manner. The Court overruled the previous view expressed in Pio Food Packers and upheld the interpretation in Ganesh Prasad Dixit.In conclusion, the Supreme Court set aside the High Court's order and dismissed the writ petitions. The department was directed to proceed with the assessment after providing the respondents with an opportunity to file objections. No costs were awarded considering the nature and circumstances of the case. The appeals were allowed, bringing clarity to the interpretation of Section 6-A of the Act.