TaxTMI 
TaxTMI 
1979 (2) TMI 182
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....levying purchase tax on the purchase turnover of chillies which had escaped assessment earlier. In the appeals filed by the assessee, the Deputy Commissioner of Commercial Taxes (Appeals), Dharwar, following the decision of this Court in B.S. Guddad & Sons v. State of Mysore[1974] 34 S.T.C. 421., modified the orders of assessment directing the Commercial Tax Officer to restrict the levy of tax under section 6 to the purchase turnover made up of the purchases from small dealers and to exempt the purchases made from agriculturists. Accordingly, the Commercial Tax Officer redetermined the taxable turnover under section 6 of the Act. After the decision of the Supreme Court in State of Tamil Nadu v. M.K. Kandaswami[1975] 36 S.T.C. 191 (S.C.)., the Commissioner initiated action under section 22A of the Act to revise the orders passed by the Deputy Commissioner and the consequential orders passed by the Commercial Tax Officer as he was of the view that the orders were erroneous and prejudicial to the interests of the revenue. After hearing the learned counsel appearing for the assessee, the Commissioner passed orders revising the orders passed in appeal by the Deputy Commissioner and the ....
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....e turnover of Rs. 6,24,686.67, but the Additional Commercial Tax Officer, III Circle, Hubli, who was the assessing authority, determined the total and taxable turnover at Rs. 8,85,407.09, which included a turnover of Rs. 2,40,223.84 relating to the purchase of paddy, and a sum of Rs. 10,183.25 relating to the purchase of firewood. The assessee contended that the purchases of paddy were from agriculturists or non-registered dealers and, as such, were not liable to be taxed. The said contention was rejected by the Deputy Commissioner in the appeal preferred by the assessee. On second appeal to the Sales Tax Appellate Tribunal, it was held that the purchase turnover relating to firewood was not taxable, but the purchase turnover of paddy was liable to be taxed. Against the order of the Tribunal, both the assessee and the department filed revision petitions before this Court. It was urged on behalf of the assessee that a dealer who manufactured beaten rice from the paddy purchased from agriculturists or non-registered dealers was not liable to pay tax under section 6. Relying on the decision of the Supreme Court in Ganesh Prasad Dixit v. Commissioner of Sales Tax[1969] 24 S.T.C. 343 (S....
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....ction 7A of the Tamil Nadu Act was at once a charging as well as a remedial one and that the main object of that provision was to block leakage and prevent evasion of tax. The Supreme Court further observed that in interpreting such a provision a construction which would defeat its purpose and in effect obliterate it from the statute book should be eschewed and if more than one construction was possible, that which preserved its workability and efficacy was to be preferred to the one which would render it otiose or sterile. The Supreme Court, in the course of its decision, approved the decision of the Kerala High Court in Yusuf Shabeer v. State of Kerala[1973] 32 S.T.C. 359., in which section 5A of the Kerala Act was considered by the Kerala High Court. The relevant part of section 5A of the Kerala Act, which is almost identical in language with section 6 of the Act, read as follows: "5A. Levy of purchase tax.-(1) Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under section 5, and either- (a) consumes....
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....t to the purchase by the dealer those goods are not available for taxation owing to the act of the dealer in consuming them in the manufacture of other goods for sale or otherwise or despatching them in any manner other than by way of sale in the State or despatching them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. In the instant case, the sales of chillies by the agriculturists to the assessee were not liable to tax in the hands of the sellers as they were agriculturists and the goods were the produce of crops raised by them. After purchase the assessee despatched them outside the State but not as a result of sale or purchase in the course of inter-State trade or commerce. Hence, under section 6, the purchase turnover of those goods is liable to tax subject only to section 5(5) of the Act, which provides that a dealer whose total turnover in any year is less than Rs. 25,000, shall not be liable to pay tax in that year. In reaching the above conclusion, we have followed the pronouncement of the Supreme Court in State of Tamil Nadu v. M.K. Kandaswami[1975] 36 S.T.C. 191 at 201 (S.C.)., which reads: "In....