Purchase tax under section 6-A applies to taxable goods bought tax-free and later despatched outside the State.

Section 6-A of the Andhra Pradesh General Sales Tax Act applies where taxable goods are purchased in circumstances in which no tax is payable under section 5 or section 6, and it operates to prevent tax leakage and evasion. On the stated facts, gum purchased from a registered dealer who did not collect tax because he acted as agent of the agriculturist producer, and bought by a dealer in the course of business, fell within clause (i). The subsequent despatch of the goods outside the State for sale also attracted clause (c). The levy of purchase tax under section 6-A was therefore upheld.

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Issues: Whether section 6-A of the Andhra Pradesh General Sales Tax Act applied to impose purchase tax when taxable goods were bought from a registered dealer who did not collect tax and were thereafter despatched outside the State.

Analysis: Clause (i) of section 6-A covers purchases of goods liable to tax where, in the circumstances obtaining, no tax is payable under section 5 or section 6. The provision is intended to plug leakage and prevent evasion of tax. Since the gum purchased was generally taxable, the seller did not collect tax because he acted as agent of the agriculturist producer, and the purchaser was a dealer buying in the course of business, the purchase fell within clause (i). The further fact that the goods were despatched to a place outside the State for sale also attracted clause (c) of section 6-A.

Conclusion: The levy of tax under section 6-A was upheld and the challenge to the assessment failed.

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