Court upholds sales tax on undocumented hides, exempts with proper proof. Interest not leviable on disputed tax.

The court upheld the Sales Tax Tribunal's decision that purchases of hides and skins without proper documentation were taxable. The dealer's argument that subsequent sales should not be taxable was rejected. The court emphasized the requirement for purchases from registered dealers and proof of tax payment by the selling dealer for tax exemption. Regarding the interest levied on the tax, the court ruled that the disputed tax did not constitute admitted liability, thus interest was not leviable. The revision petition was partially allowed, setting aside the Tribunal's order on interest levying and directing a new order.

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Issues:
1. Taxability of purchases of hides and skins without proper documentation.
2. Levying of interest on tax imposed on the turnover.

Analysis:
1. The revision petition challenged an order by the Sales Tax Tribunal regarding the taxability of purchases of hides and skins amounting to Rs. 3,73,000 for the assessment year 1976-77. The issue revolved around the dealer's failure to furnish Form III-A while purchasing from unregistered dealers and selling without obtaining the form. The Tribunal held that the purchases were taxable since the dealer did not provide the necessary documentation. The dealer's argument that subsequent sales should not be taxable was rejected based on legal provisions. The judgment referred to a previous case establishing that tax exemption requires purchases from registered dealers and proof of tax payment by the selling dealer, which the current dealer failed to demonstrate. Consequently, the exemption was rightly denied.

2. Another issue raised was the imposition of interest on the tax levied. The assessing officer had imposed interest under Section 8(1) of the Act, upheld by the Tribunal. The dealer contested the taxability of purchases, claiming only sales should be taxed due to the absence of Form III-A. However, the Tribunal considered the tax as rightfully payable, emphasizing that the dealer's denial of liability was not sufficient to avoid interest. The judgment highlighted the requirement to pay tax based on the return filed, even if the final assessment differs. It cited a Supreme Court case emphasizing the obligation to pay due tax to avoid interest liability. Ultimately, the court ruled that the disputed tax could not be deemed as admitted liability, thus interest was not leviable. As a result, the revision petition was partially allowed, setting aside the Tribunal's order on interest levying and directing a new order in line with the judgment.

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