Sales tax exemption depends on proving non-collection of tax, and labels like rusum cannot control substance.

Sales of jaggery through commission agents raised two tax questions: whether agriculturist-principals became dealers because sugarcane was converted into jaggery, and whether exemption under section 9 of the Andhra Pradesh General Sales Tax (Amendment) Act, 1970 applied where no tax had been collected. The first issue depended on factual enquiry into whether the produce was marketed in another form and whether the principals were carrying on business. On the second issue, the dealer had to prove non-collection of tax, and the real nature of amounts described as rusum or kolagaram had to be judged from accounts, invoices, surrounding circumstances and mercantile custom, not the label alone.

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Issues: (i) whether sales of jaggery effected by commission agents on behalf of ryot-principals were taxable on the footing that the principals were dealers carrying on business; and (ii) whether the assessees were entitled to exemption under section 9 of the Andhra Pradesh General Sales Tax (Amendment) Act, 1970 on the ground that no amount was collected by way of tax.

Issue (i): whether sales of jaggery effected by commission agents on behalf of ryot-principals were taxable on the footing that the principals were dealers carrying on business.

Analysis: The statutory scheme, as amended, treated an agriculturist-grower as a dealer where agricultural produce was sold in a different form after being subjected to a process other than mere cleaning, grading or sorting. The question whether conversion of sugarcane into jaggery amounted to a process that brought the principals within the definition of dealer depended on the facts and the nature of the activity. On the record, no conclusive finding could be recorded without an enquiry into whether the produce was marketed in another form and whether the principals were carrying on business within the meaning of the Act.

Conclusion: The issue was treated as requiring factual enquiry and did not furnish a basis for interference with the order under challenge.

Issue (ii): whether the assessees were entitled to exemption under section 9 of the Andhra Pradesh General Sales Tax (Amendment) Act, 1970 on the ground that no amount was collected by way of tax.

Analysis: The exemption under section 9 was available only where the dealer established that no amount had been collected by way of tax. The burden of proof lay on the dealer. The Court held that the name given to the collection, such as rusum or kolagaram, was not ative by itself; the assessing authority had to determine the real character of the collection from the accounts, invoices, cash memos, surrounding circumstances and any mercantile custom. Since the matter required factual investigation, the Tribunal was justified in directing fresh consideration by the assessing authority.

Conclusion: The assessees were not entitled to immediate exemption and the remand for enquiry was upheld.

Final Conclusion: The revision petitions failed, and the Tribunal's order calling for fresh enquiry and rejecting the assessee's claim of automatic exemption was sustained.

Ratio Decidendi: In claims for sales tax exemption based on non-collection of tax, the dealer bears the burden of proving that the amount was not collected by way of tax, and the real character of the collection must be determined from the substance of the transaction and surrounding evidence rather than the label used by the parties.

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