Purchase tax on gingerly oil-seeds depends on seller status: agriculturists attract section 7-A, but unregistered dealer purchases need verification.

Purchases of gingerly oil-seeds from agriculturists were held taxable under section 7-A of the Tamil Nadu General Sales Tax Act because agriculturists were persons not liable to tax, so purchase tax attached to the buyer. By contrast, turnover said to relate to purchases from shandy dealers or other unregistered dealers could not be taxed under section 7-A where gingerly oil-seeds were declared goods taxable at the first sale under section 4 read with entry 6(ii) of the Second Schedule; in that setting, tax was exigible in the seller's hands, subject to verification of the assessee's purchase particulars on remand.

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Issues: (i) whether purchases of gingerly oil-seeds from agriculturists were liable to tax under section 7-A of the Tamil Nadu General Sales Tax Act; (ii) whether the turnover relating to purchases from shandy dealers or other unregistered dealers could be taxed under section 7-A, or whether tax was exigible only at the point of first sale under section 4 read with entry 6(ii) of the Second Schedule.

Issue (i): whether purchases of gingerly oil-seeds from agriculturists were liable to tax under section 7-A of the Tamil Nadu General Sales Tax Act.

Analysis: Section 7-A applies where a dealer purchases goods from a person who is not liable to tax, and the materials showed that purchases from agriculturists fell within that category. The assessee had furnished purchase particulars, but the nature of the seller, namely agriculturists, attracted the purchase tax provision.

Conclusion: This issue was decided against the assessee and in favour of the Revenue.

Issue (ii): whether the turnover relating to purchases from shandy dealers or other unregistered dealers could be taxed under section 7-A, or whether tax was exigible only at the point of first sale under section 4 read with entry 6(ii) of the Second Schedule.

Analysis: Gingerly oil-seeds were treated as declared goods, and the scheme of section 4 read with entry 6(ii) made the tax attach at the first sale in the State. Sales by unregistered dealers were therefore taxable in the hands of the seller, not in the hands of the purchaser. The Revenue could still verify the particulars furnished by the assessee, and purchase tax under section 7-A would arise only if the claimed purchases from shandy dealers were found to be incomplete or false.

Conclusion: This issue was decided in favour of the assessee, subject to verification of the purchase particulars on remand.

Final Conclusion: The purchase turnover from agriculturists remained taxable under section 7-A, while the turnover said to relate to shandy dealers or other unregistered dealers required factual verification by the assessing officer, and relief was to be granted if those purchases were established.

Ratio Decidendi: For declared goods taxable at the first sale point, purchase tax cannot be shifted to the buyer merely because the seller is an unregistered dealer, but section 7-A applies to purchases from agriculturists or other persons not liable to tax, subject to proof of the actual source of purchase.

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