1972 (7) TMI 82 - SC - VAT and Sales Tax

Whether the purchases of groundnuts made by assessee did not become taxable as soon as they made those purchases? Held that - Appeal dismissed. It is clear that each of the appellants becomes liable to the payment of tax as a purchasing miller just as a last dealer would be liable on the purchases made by him. Hence the last dealer and the miller who purchases presumably to convert the groundnuts into other products are placed on an equal footing. We were not satisfied that there is a possibility of double taxation or of taxation of the same product at more than one point of purchase.

Summary

Issues:
Validity of item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957 in relation to section 15(a) of the Central Sales Tax Act, 1956.

Analysis:
The Supreme Court addressed the issue of the validity of item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957 concerning the 'point of levy' and its compliance with section 15(a) of the Central Sales Tax Act, 1956. The appellants, who were millers, had challenged the validity of the provision in the High Court, primarily on the grounds of conflict with the Central Act. The specific concern raised was whether the tax on groundnuts purchased by the millers was being levied at multiple points, potentially leading to double taxation. The Court noted that the appellants did not provide detailed facts regarding the nature of the demand against them but focused solely on the alleged conflict between the two Acts.

The Court examined item 6 of Schedule III, which mandated the point of levy for groundnuts when purchased by a miller. It compared this provision with section 15 of the Central Act, which imposed restrictions on the tax payable on declared goods. The rate of tax specified in the Andhra Pradesh Act was a subject of relief granted by the High Court, and the focus shifted to the aspect of taxation at the point of purchase by millers. The Court emphasized that the liability to pay tax on purchases by millers falls only at one point, and the charge becomes effective as soon as the purchase is made, even though the liability can be computed later. Referring to a previous decision, the Court clarified that the turnover relating to purchases by millers becomes liable to tax immediately upon purchase, irrespective of subsequent dealings with the goods.

The Court rejected the argument of potential double taxation or taxation at multiple points, asserting that the liability to pay tax as a purchasing miller is akin to that of a last dealer. It highlighted that the liability arises at the point of purchase by millers, who are presumed to buy groundnuts for conversion into other products. The Court cited a previous case to support its stance that the liability to pay tax is triggered by the act of purchase by a miller and not subsequent dealings with the goods. Ultimately, the Court dismissed the appeals, upholding the validity of the provision in question and emphasizing the equal treatment of millers and last dealers in terms of tax liability.

In conclusion, the Supreme Court affirmed the validity of item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957 concerning the point of levy for groundnuts purchased by millers. The Court clarified that the liability to pay tax falls only at the point of purchase by millers and rejected the possibility of double taxation or taxation at multiple points. The judgment highlighted the immediate tax liability upon purchase by millers and emphasized the equal treatment of millers and last dealers in terms of tax liability.