TaxTMI 
TaxTMI 
1982 (3) TMI 229
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....son other than a registered dealer, will pay tax on the turnover, though the tax hitherto was not payable under section 5 or under section 6 of the Act. It is common ground that in all these cases we are solely concerned with the adjudication on questions of law, and therefore, we confine ourselves with the same without dwelling on the factual side of each petition. The contentious grounds raised by the counsel may now be enumerated: (1) Section 6-A seeks to make a distinction while imposing tax on the purchaser, who purchases goods from registered dealers on one hand and from persons other than registered dealers on the other and so discriminatory as it has no rational nexus with the object and therefore offends article 14 of the Constitution of India. (2) Section 6-A in substance is a levy on the act of user or consumption and so cannot reasonably be construed as tax on sale or purchase. Hence, it is ultra vires the powers of the State Legislature. (3) Sale of commodity, say milk, by the agriculturist vendors is exempt from tax under section 9 of the Act. Therefore, the milk purchased by the petitioners cannot be subjected to tax. (4) The liability to pay tax un....
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..... Section 5-A reads: "5-A. Levy of additional tax on turnover.-Every dealer who is liable to pay tax under section 5 shall, in addition to the tax payable under that section, pay for each year a tax at the rate of one-fourth paisa, on every rupee of his turnover liable to tax, if his total turnover for that year is rupees three lakhs or more." Counsel for the petitioners contend that the language of section 5-A is explicit in that it seeks to levy additional tax on such of those dealers, who are liable to pay tax under section 5 only in addition to the tax payable under that section. Further, it is not in dispute that the transactions covered by section 6 are not subject to levy of additional tax under section 5-A. So, a fortiori the transactions covered by section 6-A which has been enacted subsequent to section 5-A cannot be subjected to levy of additional tax. The counter arguments of the learned Government Pleader is that the purchaser under section 6-A is liable to pay tax on goods under section 5 or section 6 and since section 5 is expressly covered by section 5-A, by necessary implication, the transactions covered by section 6-A should also be held to be covered by ....
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....tional relation to the object of taxation. It is well-settled that courts admit, subject to adherence to the fundamental principles of the doctrine of equality, a larger play of legislative discretion in the matter of classification in regard to tax legislation. The legislature may select persons, properties, transactions and objects, and apply different methods and even rates of tax, if the legislature does so reasonably. If the classification is rational, the legislature is free to choose objects of taxation, impose different rates, exempt classes of property from taxation, subject different classes of property to tax in different ways and adopt different modes of assessment. The courts will not strike down the Act as denying the equal protection of the laws merely because other objects could have been, but are not, taxed by the legislature. A statute is not, therefore, open to attack on the ground that it taxes some persons or objects and not others. It is only when, within the range of its selection, the law operates unequally, and if that operation cannot be justified on the basis of any valid classification, it would be violative of article 14 of the Constitution: vide East I....
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....arise on the occasion of the sale but was made to depend upon subsequent consumption or use of the goods or dealing with the goods and which, therefore, rendered into tax other than the sales tax, possibly a tax on consumption or use, the imposition on which was beyond the competence of the State Legislature, held: "Although sales tax is a tax imposed on the occasion of the sale of goods, it has no reference to the point of time at which the sale or purchase takes place. It refers to the connection with the event of purchase or sale and not the point of time at which such purchase or sale takes place. To read it otherwise would render in retrospective imposition of sales tax invalid as in every such case the tax would not be one which arises on the occasion of sale. Similar would be the position in the case of tax imposed on the last purchase point in the State, for the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased." We are, therefore, of undoubted view that the commodity like milk purchased and later used or utilised for the manufacture of a commodity which, though later, is made ....
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.... the Fourth Schedule shall be exempt from tax under this Act in respect of such goods: Provided that a dealer who deals in textiles, sugar or tobacco and its products, on which duties of excise are not levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, shall not be so exempt." Section 9 unlike section 8, is not a case of total exemption. Under section 8 there is a totality of exemption from tax on the goods specified in the Fourth Schedule, whereas section 9 enumerates, qualifies and restricts its exemptive effect in respect of sale or purchase of a specified class of goods as either at all points or at any specified point or by any specified class of persons whether it is with reference to the whole or any part of the turnover, or may extend to the whole or any part of the State. Therefore, it is not possible to hold that the exemptions contemplated under section 9 will ipso facto exempt the purchases contemplated under section 6-A as it is a special provision enacted by virtue of the Amendment Act in the year 1976 and unless it is deliberately and explicitly exempted the events of tax contemplated by section 9, the same cannot be saved. We....
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....in the latter half certain sums charged by the "dealer" in respect of the goods sold either at the time of or before the delivery will also be included in the turnover, it should not be held to mean that the amount charged as the consideration for the sale or purchase should also be by the "dealer". The legislature might, just as well, have employed the words "by the dealer" soon after the words "as the consideration for the sale or purchase of the goods". The conspicuous absence of the words aforesaid, makes the object of the legislature obvious. The various sums charged by the dealer under the latter part of the definition cannot be taken to mean and include the total consideration for sale or purchase of the goods charged. The consideration charged by any person for sale or purchase is distinct and will constitute turnover by itself. But, if any sums are charged by the "dealer" as contemplated by the latter part of the definition they will also be added to the turnover, and therefore, no violence will be caused to the language if it is not defined and interpreted as sought to be done by the learned counsel for the petitioners. Hence the petitioners' contention is rejected. Th....
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.... rely upon the distinction in the provisions enacted in section 7-A of the Madras General Sales Tax Act and section 5-A of the Kerala General Sales Tax Act, corresponding to section 6-A of the Act and argued that unlike section 6-A of the Act in the aforesaid two sections the two clauses, i.e., clauses (i) and (ii) of section 6-A are combined in one sub-section. But, in our view that does not make any difference. In fact section 7-A of the Madras Act came to be construed by the Supreme Court in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191 (SC). The Supreme Court while dealing with the provisions of sub-section (1) of section 7-A, which reads: "(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 3, 4 or 5, as the case may be, and either,- (a) consumes such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State; or (c) despatches them to a place outside the State except as a direc....
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....on 7-A is satisfied. The meaning and scope of the phrase 'purchases......in circumstances in which no tax is payable under section 3, 4 or 5' and its co-existence with ingredient (4) can be best understood by applying it to the cases in hand. In all the forty appeals under consideration, the goods in question, namely, arecanuts, gingerly seeds, turmeric, grams, castor seeds and butter are 'goods, the sale or purchase of which is generally taxable under the Act'. This is to say, they are 'taxable goods'. The sales of arecanuts, gingerly seeds, turmeric and grams were not liable to tax in the hands of the sellers as they were agriculturists and the goods were the produce of the crops raised by them. Similarly, butter was purchased by the assessees concerned directly from the house-holders whose sales are not liable to tax under the Act. Castor seeds are said to have been purchased by the assessees concerned from unregistered dealers under bought notes. If this is a fact, then such sales may not be liable to tax under the Act. Thus, in all these cases, the purchases have been made by the dealers of 'goods, the sale or purchase of which is generally liable to tax under the....
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....6, as under: "Section 5 of the Andhra Pradesh General Sales Tax Act, 1957, provides for the levy of tax on sales or purchases of goods. However, in certain circumstances goods sold or purchased are escaping tax. It is, therefore, proposed to levy tax at the rates specified in section 5 or section 6 on the purchases in the circumstances specified in the proposed new section 6-A." So the contentions of the learned counsel that section 6-A of the Act gives rise to multi-point tax or attracts the goods to tax which are not otherwise exigible to tax and that the provisions enacted in section 6-A(ii) are otiose, have in our undoubted view, no substance and we have no hesitation in rejecting the same. W.P. Nos. 2853, 2839 and 3322 of 1980 and 6095 of 1979: Sri Rama Rao, the learned counsel for the petitioners, advanced certain arguments which are peculiar to the aforementioned writ petitions. His contention in the main, has been directed to two commodities, viz., cream and husk. The contention is that the petitioners purchased cream and convert the same into ghee and then it is sold. Since the sale of ghee is exigible to tax, the petitioners should not be made liable to pay ta....