Dealer liability for sales tax continues despite non-collection, but deferment notification required fresh reconsideration.

Sales tax liability under the Tamil Nadu General Sales Tax Act attached to the dealer on turnover, and non-collection from the purchaser did not by itself displace that statutory obligation. At the same time, the Government order providing for deferment of sales tax for the film city project had not been examined for its scope and effect by the fact-finding authorities, even though it was relevant to the disputed sales. The matter therefore required reconsideration in light of the deferment scheme, and the tax demand was remitted for fresh consideration.

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Issues: (i) whether liability to pay sales tax under the Tamil Nadu General Sales Tax Act, 1959 rested on the dealer notwithstanding non-collection from the purchaser; (ii) whether G.O.M. No. 169 dated 27 June 1994, providing for deferment of sales tax for the film city project, had a bearing on the tax demand and warranted remand for fresh consideration.

Issue (i): whether liability to pay sales tax under the Tamil Nadu General Sales Tax Act, 1959 rested on the dealer notwithstanding non-collection from the purchaser.

Analysis: Section 3 of the Act casts the tax liability on the dealer according to the turnover and the statutory scheme. The fact that the dealer did not charge or collect sales tax from the purchaser does not by itself displace the statutory liability.

Conclusion: The dealer remained liable to pay sales tax under the Act notwithstanding non-collection from the purchaser.

Issue (ii): whether G.O.M. No. 169 dated 27 June 1994, providing for deferment of sales tax for the film city project, had a bearing on the tax demand and warranted remand for fresh consideration.

Analysis: The Government order, issued with concurrence of the concerned departments, contemplated deferment of sales tax for five years wherever levy was applicable. Section 17A of the Act empowered the Government to notify deferred payment of tax for new industries and similar units. Since the authorities below had proceeded without examining the scope and effect of the notification, and the notification was relevant to the disputed sales for the assessment years in question, the matter required reconsideration.

Conclusion: The notification had a material bearing on the controversy and the matter had to be remitted for fresh consideration.

Final Conclusion: The appeal succeeded to the extent that the impugned judgment was set aside and the case was remitted to the Tribunal for reconsideration of the sales tax demand in the light of the Government order and the statutory deferment scheme.

Ratio Decidendi: Liability under the sales tax statute attaches to the dealer, but where a government order issued under the enabling power contemplates deferment of tax and its scope has not been examined by the fact-finding authorities, the dispute must be reconsidered on that basis.

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