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of <h1>Supreme Court rules tanning bark purchase subject to sales tax</h1> <h3>State of Andhra Pradesh Versus Abdul Bakhi & Bros.</h3> The Supreme Court allowed the appeal, setting aside the High Court's order and restoring the decision of the Sales Tax Appellate Tribunal. The Court held ... It cannot be said in the present case that tanning bark was bought by the respondents for any purpose unconnected with the business carried on by them, viz., manufacture and sale of the dressed hides and skins. Consumption in the business and not sale of the commodity bought therefore does not exclude the respondents from the definition of dealer qua the tanning bark. Issues:1. Whether the price paid for buying tanning bark required in the tannery is liable to duty under the Hyderabad General Sales Tax Act.2. Interpretation of the term 'dealer' under the Act.3. Determining if buying a commodity for consumption in the business qualifies a person as a dealer.Analysis:1. The case involved a dispute regarding the liability to pay tax on the price paid for buying tanning bark used in a tannery. The respondents contended that since the tanning bark was bought for consumption in the tannery and not for sale, they should not be considered dealers in tanning bark and thus not liable to duty under the Hyderabad General Sales Tax Act.2. The definition of 'dealer' under the Act includes any person engaged in the business of buying, selling, or supplying goods. The Court clarified that to be considered a dealer, a person must be engaged in the business of buying or selling goods with a profit motive. Mere buying for personal consumption does not qualify a person as a dealer, but using a commodity in the course of trade or manufacturing another commodity for sale does make a person a dealer.3. The Court rejected the view that buying a commodity for consumption in the business, rather than for sale, exempts a person from being classified as a dealer. It emphasized that the purchase of a commodity for use in the manufacturing process or for consumption in the business still qualifies the person as a dealer. The Court cited a similar interpretation by the Madras High Court in a related case to support its decision.In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's order and restoring the decision of the Sales Tax Appellate Tribunal. The Court held that the purchase of tanning bark by the respondents for use in their tannery business qualified them as dealers under the Act, and the price paid for buying tanning bark was indeed liable to duty under the Hyderabad General Sales Tax Act.
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