Purchase tax liability upheld where genuine purchases and seller's handling of goods were not proved despite later cancellation of registration.

Purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 was treated as leviable where the assessee failed to prove that the purchases were genuine or that the seller had actually dealt with the goods. The fact that the seller's registration was cancelled later did not by itself establish exemption, and payment by cheque was held insufficient to prove a valid sale transaction. On the factual record, the purchases were found not to have been shown as having suffered tax, so the Tribunal's application of Section 7-A was accepted and the levy of purchase tax was upheld.

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Issues: Whether purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 was leviable on purchases said to have been made from a dealer whose registration was cancelled later, when the genuineness of the purchases and handling of the goods by the seller were not proved.

Analysis: The assessee claimed exemption on the footing that the purchases were effected before cancellation of the seller's registration. The finding recorded on the facts was that the seller was not shown to have actually dealt with the goods, no material established genuine movement or handling of the goods by the seller, and payment by cheque by itself did not prove a valid sale transaction. In such circumstances, the Tribunal's view that the purchases had not been shown to have suffered tax and that Section 7-A applied was accepted.

Conclusion: The levy of purchase tax was upheld and the revision failed.

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