Purchase tax cannot be shifted to buyer merely because the selling dealer enjoyed exemption from sales tax.

Purchase tax under section 6A of the Andhra Pradesh General Sales Tax Act, 1957 could not be levied on burnt lime purchased from exempted selling dealers. The Court held that burnt lime remained taxable under the Act, but the exemption granted to the sellers did not alter the basic tax character of the goods or permit purchase tax to be fastened on the buyer merely because tax was not collected at the sale stage. On the facts, section 6A was inapplicable and the purchaser was not liable for the turnover in question. The assessment demands, as sustained in appeal and revision, were therefore unsustainable.

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Issues: (i) Whether purchase tax under section 6A of the Andhra Pradesh General Sales Tax Act, 1957 could be levied on burnt lime purchased from exempted selling dealers. (ii) Whether the exemption granted to the selling dealers prevented the burden of tax from being shifted to the purchasing dealer.

Issue (i): Whether purchase tax under section 6A of the Andhra Pradesh General Sales Tax Act, 1957 could be levied on burnt lime purchased from exempted selling dealers.

Analysis: Section 6A operates where goods liable to tax under the Act are purchased from a registered dealer in circumstances in which no tax is payable under section 5 or section 6 and are thereafter consumed or otherwise dealt with in the manner specified in the provision. Burnt lime was not declared goods and fell under the First Schedule to the Act, so the normal single-point levy under section 5 applied. The selling dealers had been granted exemption under the Government Order issued under the Act, but the Court held that exemption does not alter the underlying taxability of the goods. Relying on the principle affirmed in the later Supreme Court decision, the Court treated section 6A as inapplicable where the exempted sale did not justify fastening purchase tax on the buyer.

Conclusion: The petitioner was not liable to pay purchase tax under section 6A on the turnover relating to burnt lime.

Issue (ii): Whether the exemption granted to the selling dealers prevented the burden of tax from being shifted to the purchasing dealer.

Analysis: The Court distinguished the authority relied upon by the Revenue and accepted the principle that exemption and levy are distinct, but held that the ratio governing the effect of exemption on tax liability applied to the present facts. The exemption granted to the selling dealers meant that the goods did not suffer tax at the sale stage, and the purchasing dealer could not be made liable merely because of that exemption. The earlier decision interpreting the analogous purchase-tax provision was treated as not deciding this specific question, while the later Supreme Court ruling on the effect of exemption was followed as controlling.

Conclusion: The burden of tax could not be shifted to the petitioner merely because the selling dealers were exempt from sales tax.

Final Conclusion: The purchase-tax demands were unsustainable, and the assessments as upheld in appeal and revision could not stand.

Ratio Decidendi: An exemption granted to the selling dealer does not, by itself, justify levy of purchase tax on the buyer where the statutory scheme does not permit shifting the tax burden in the manner sought.

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