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of <h1>Commission agents liable for sales tax under Andhra Pradesh GST Act. Deeming provision upheld, no need to prove dealer status.</h1> <h3>Tholasi Venkatamunuswamy Chetty & Sons and Others Versus The Commercial Tax Officer, Chittor and Another</h3> The court upheld the validity of Explanation II of Section 2(1)(e) of the Andhra Pradesh General Sales Tax Act, 1957, stating that commission agents are ... - Issues Involved:1. Liability of commission agents to pay sales tax.2. Validity of Explanation II of section 2(1)(e) of the Andhra Pradesh General Sales Tax Act, 1957.3. Necessity to prove that a person is a dealer doing business under section 2(1)(bbb).4. Legislative competence to introduce a deeming provision.Detailed Analysis:1. Liability of Commission Agents to Pay Sales TaxThe petitioners, who are commission agents selling jaggery, argued that they are not liable to pay sales tax because their principals (agriculturalists) are not liable. The principals grow sugarcane and convert it into jaggery for agricultural income, not for business purposes. The court noted that 'the commission agent is liable to pay sales tax only if his principal is liable.'2. Validity of Explanation II of Section 2(1)(e) of the Andhra Pradesh General Sales Tax Act, 1957The petitioners challenged the validity of Explanation II, arguing it is repugnant to the main definition of a dealer. The court examined various precedents and legal principles regarding deeming provisions. It concluded that 'the deeming provision can be introduced either as an explanation or as a proviso and it has never been struck down on the ground that it is opposed to the spirit of the main section.' The court held that Explanation II, which deems a grower of agricultural produce who sells it in a different form as a dealer, is valid.3. Necessity to Prove that a Person is a Dealer Doing Business under Section 2(1)(bbb)The petitioners contended that even if Explanation II is valid, it is still necessary to prove that the person is doing business as defined in section 2(1)(bbb). The court disagreed, stating that 'when by such legal fiction the persons contemplated in Explanation II come within the definition of 'dealer' under clause (e), the requirement of carrying on business is also assumed to be present by virtue of the legal fiction.' The court emphasized that the legal fiction created by Explanation II assumes the requirement of doing business.4. Legislative Competence to Introduce a Deeming ProvisionThe court examined the legislative competence to introduce a deeming provision and referred to multiple judgments, including those by the Supreme Court and Privy Council. The court concluded that 'so long as the said power does not go beyond the legislative competence, the deeming provision cannot be held to be invalid.' The court found that Explanation II does not affect the powers of the Legislature and is within its competence.ConclusionThe court dismissed all the writ petitions, holding that Explanation II to section 2(1)(e) of the Andhra Pradesh General Sales Tax Act, 1957, is valid and that it is unnecessary to establish in every case whether the person has been carrying on business. The court ordered costs to be paid by the petitioners, with Government Pleader's fees set at Rs. 50 in each case.
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