TaxTMI 
TaxTMI 
2010 (7) TMI 878
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....the assessee liable for tax on the purchase of coconuts and copra at 4% under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called as 'Act') in T.N.G.S.T. 845223/92-93 dated 29.11.1996 for the assessment year 1992-93 by fixing the turnover at Rs.4,79,650/-. Challenging the said assessment an appeal was filed by the assessee to the First Appellate Authority contending that inasmuch as the sale of coconuts and copra having been exempted and the purchases are not being first one purchase tax cannot be levied on the assessee. It was also contended that the assessing authority cannot shift the point of levy merely because the oil millers are liable to tax. Hence according to the assessee the commodity being not liable to tax at the point of purchase the question of assessment under Section 7-A of the Act does not arise. 2.3.However the First Appellate Authority after holding that coconuts and copra are taxable under entry 6(viii) of the II Schedule to the Act, and the appellants being the manufactures of coconut oil and coconut oil cake having purchased the same has held that it is liable for purchase tax under Section 7-A of the Act at the rate of 4%. It has....
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....f the case and applied the judgment rendered in SHANMUGA TRADERS v. STATE OF TAMIL NADU [VOL.114 1999 STC PAGE 1] wrongly. 7.It is an case of wrong application of a judgment to the facts involved in a particular case. Admittedly the assessee is a purchaser and not a seller. The facts involved in the judgment reported in SHANMUGA TRADERS v. STATE OF TAMIL NADU [VOL.114 1999 STC PAGE 1] are concerned with the sale and not a purchase. Therefore the decision of the Tribunal basing reliance upon the said judgment is totally erroneous and liable to be set aside. 8.Section 7-A of the Act is both a remedial and a charging provision. The main object is to plug leakage and prevent evasion of tax. Section 7-A creates a liability against the dealer on his purchase turnover with regard to goods which are otherwise taxable but not taxed due to other factors such as exemption etc. The Scope of Section 7-A has been considered at length by the Hon'ble Apex Court in VOL.36 1975 STC 191 [STATE OF TAMIL NADU v. M.K.KANDASWAMI AND OTHERS] wherein the Hon'ble Apex Court has observed as follows: "The words "under the Act" will evidently include a charge created by Section....
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.... is given to only a specified class of persons for the sale the same is only partial in nature and in such an eventuality the exemption would not cover the liability under Section 7-A of the Act. In the present case on hand, admittedly the exemptions do not cover the assessee and therefore merely because the sales by the agriculturists are exempted it cannot be contended that the purchase made by the assessee also to be exempted in the teeth of Section 7-A of the Act. 12.The judgment of the Apex Court referred above has been followed subsequently by the Hon'ble Supreme Court in COFFEE BOARD, KARNATAKA v. COMMISSIONER OF COMMERCIAL TAXES AND OTHERS [VOL.70 1988 STC PAGE 162] wherein it has held as follows: "The coffee growers being agriculturists are not dealers and therefore are not liable to pay any sales tax or purchase tax, it was submitted. The demand for purchase tax is in effect a demand on the growers who were exempt from such levy, as the monies required for paying the tax if the same in lawful has necessarily to come out of the monies otherwise payable to the growers. The object of the pool marketing system is not to deprive the growers of a fair compensation for the....
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.... and that goods are no longer available either because they cease to exist or be available for further consideration attracting tax. In such contingencies, if the selling dealer cannot be taxed, the purchasing dealer is taxed by levy of purchase tax. The Supreme Court in the decision reported in [1993] 88 STC 98 (SC) (HOTEL BALAJI v. STATE OF ANDHRA PRADESH), held that the postponement does not convert what is avowedly a purchase tax to a consignment tax or tax on consumption. In so taxing, the question of shifting the point of taxation also does not take place. It is relevant to note that even in the case of local sales, where the first sale has not suffered tax, the same are brought under the net of taxation by reason of the second proviso to section 3(2)." 15.The Division Bench was pleased to observe that in a case where the seller is not or cannot be taxed then the purchasing dealer of such goods is liable to be taxed. In so far as the scope of Section 7-A of the Act is concerned, the Division Bench before whom the said provision has been challenged has observed as follows: "We have already seen that the apex court held "that section 7A is at once a charging as well as a ....