Purchase tax, assessed tax interest, and freight inclusion in turnover were all tested on proof and statutory conditions.

Purchase tax under section 3-AAAA was upheld on sand and bajri bought from unregistered dealers for use in a works contract, because the goods were purchased from unregistered persons and no proof of prior tax payment or statutory exemption was produced. Interest under section 8(1) was not leviable on turnover not admitted by the dealer, since that provision applies to admitted tax defaults and assessed tax is governed by the later interest provisions. Freight was treated as part of turnover because no separate payment or supporting vouchers were shown, and the freight was found to be included in the sale price.

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Issues: (i) Whether purchase tax was leviable under section 3-AAAA on purchases of sand and bajri from unregistered dealers for use in works contract. (ii) Whether interest could be charged under section 8(1) on tax not admitted by the dealer. (iii) Whether freight formed part of the turnover for tax purposes.

Issue (i): Whether purchase tax was leviable under section 3-AAAA on purchases of sand and bajri from unregistered dealers for use in works contract.

Analysis: Section 3-AAAA was applied as a provision intended to ensure that goods taxable at the consumer stage do not escape tax. The decisive consideration was whether the goods were purchased from unregistered dealers and whether the dealer could establish prior tax payment or any statutory exemption. The factual findings were that the purchases were from unregistered persons, no purchase vouchers or proof of tax-paid goods were produced, and no material showed payment of royalty by the thekedar from whom the goods were said to have been procured. The use of the goods in works contract did not defeat the levy.

Conclusion: Purchase tax under section 3-AAAA was rightly upheld against the assessee.

Issue (ii): Whether interest could be charged under section 8(1) on tax not admitted by the dealer.

Analysis: Interest under section 8(1) applies to admitted tax defaults, whereas interest on assessed tax is governed by the later statutory mechanism under section 8(1-A) and section 8(1-B). The assessed turnover had not been admitted by the dealer in the returns, and the levy under section 8(1) was therefore not justified. The assessee remained liable only under the provisions applicable to assessed tax.

Conclusion: Interest under section 8(1) was held not leviable, but liability under section 8(1-A) and section 8(1-B) remained.

Issue (iii): Whether freight formed part of the turnover for tax purposes.

Analysis: The finding below was that no evidence showed freight was paid separately by the assessee, and no receipts or vouchers supported the claim. On the evidence, the freight was treated as having been incurred by the selling dealer and included in the sale price of the goods.

Conclusion: Freight was held to form part of the turnover and the assessee's challenge failed.

Final Conclusion: The revisions succeeded only on the question of interest under section 8(1); the levy of purchase tax and the inclusion of freight in turnover were sustained.

Ratio Decidendi: A levy under a purchase-tax provision aimed at preventing tax leakage depends on the statutory conditions and proof of exemption, while interest cannot be charged under an admitted-tax default provision on turnover that was never admitted by the dealer.

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