Purchase tax on first sale of groundnut cannot be levied on an agent society; liability rests with the auction purchaser.

Purchase tax on groundnut could not be fastened to a co-operative society acting only as agent for its agriculturist members where the statutory point of levy was the first purchase in the State. The society merely arranged sales and passed title to the auction buyer; the buyer at auction was therefore the first purchaser and the tax liability attached to that purchaser, not to the society. The amendment to the definition of dealer did not change the statutory point of levy or convert the agent society into the taxable purchaser. The challenge to Act No. 31 of 1992 was not examined because the levy failed even on the assumption that the amendment was valid.

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Issues: Whether purchase tax on groundnut could be levied on a co-operative society acting only as agent of its agriculturist members when the statutory point of levy was the first purchase in the State.

Analysis: Entry 6 of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959 fixed the levy on groundnut at the point of first purchase in the State. The society did not itself purchase the produce from its members but merely effected sales on their behalf and passed title to the auction buyer. Since the first purchaser was the buyer at the auction, the tax liability attached to that purchaser and not to the society. The amendment to the definition of dealer did not alter the statutory point of levy so as to fasten purchase tax on the agent society. The challenge to the validity of Act No. 31 of 1992 was not examined because the levy failed even on the assumption that the amendment was valid.

Conclusion: The levy of purchase tax on the society was unsustainable and the assessee succeeded.

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