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of <h1>High Court rules milk for Vijaya Spray Baby Milk Powder not taxable under APGST Act section 6-A</h1> <h3>State of Andhra Pradesh Versus AP Dairy Development Corporation Limited</h3> State of Andhra Pradesh Versus AP Dairy Development Corporation Limited - [1997] 106 STC 126 (AP) Issues:1. Whether milk utilized in the production of Vijaya Spray Baby Milk Powder is liable to be taxed under section 6-A of the APGST Act.Analysis:The judgment of the High Court of Andhra Pradesh pertains to a tax revision case filed by the State against an order of the Tribunal. The issue at hand is whether milk used in the production of Vijaya Spray Baby Milk Powder is subject to taxation under section 6-A of the APGST Act. The relevant provision, section 6-A, imposes tax on the purchase of goods, not on the sale of goods. The liability under section 6-A arises in two situations: when a dealer purchases goods from a registered dealer where no tax liability arises, or when goods are purchased from an unregistered dealer and certain conditions are met. These conditions include consuming the goods in manufacturing other goods for sale, disposing of the goods in a manner other than sale in the State, or dispatching the goods outside the State. It is crucial for the Revenue to establish that one of these conditions is fulfilled to levy sales tax under section 6-A.The Court noted that in the case at hand, the assessee purchased milk from an unregistered dealer, and it is undisputed that the sale of milk is taxable as general goods, meeting the first situation for liability under section 6-A. However, the Court analyzed whether any of the three requirements under section 6-A were fulfilled. Requirement (a), involving the consumption of goods in manufacturing other goods, was deemed inapplicable as the conversion of milk into baby milk powder was not considered manufacturing. Requirement (b), relating to the disposal of goods in a manner other than sale in the State, was also not met as the goods were intended for sale. Additionally, requirement (c) concerning dispatching goods outside the State did not apply in this scenario. Consequently, as none of the three requirements were satisfied, the Court upheld the Tribunal's decision and dismissed the tax revision case, ruling that section 6-A could not be invoked to levy sales tax on the purchase of milk.
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