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1981 (3) TMI 221 - SC - VAT and Sales TaxWhether the respondent-assessee is liable to pay sales tax on the sale of goods to his consumers? Held that - Appeal dismissed. Looking at the case from the angle of the notification dated March 30 1966 it is clear that under that notification the intention was to levy sales tax at the first stage of the sale of specified goods and the notification has gone on to describe three situations in which what should be regarded as a sale at the first stage as required by the explanation to section 5(1-A). Admittedly the instant case falls under the situation described in clause (b) of the notification which alone will be taxable and therefore the subsequent sales effected by the respondent-assessee to his consumers would be outside the pale of taxing liability under the Act.
Issues: Interpretation of section 5(1-A) and proviso thereto of the Punjab General Sales Tax Act, 1948 regarding the liability to pay sales tax on subsequent sales.
In this judgment by the Supreme Court of India, the respondent-assessee, a registered dealer of vegetable ghee, was involved in a case concerning the levy of sales tax on subsequent sales of goods. The question revolved around whether the respondent was liable to pay sales tax on the sale of goods to consumers, considering the provisions of section 5(1-A) and the proviso of the Act. The Court analyzed the interpretation of the law, particularly focusing on the intention of imposing a single point tax at the first stage of sale. It was established that subsequent sales would be exempt from tax if the necessary documents were furnished by the dealer, as per the proviso. The Court emphasized that the phrase "registered dealer from whom the goods were purchased" should be construed to refer to the original seller at the first stage, not necessarily the immediate seller. The judgment highlighted the importance of the legislative intent to tax sales at the initial stage, as outlined in the notification of March 30, 1966. The case fell under a situation described in the notification, making the subsequent sales by the respondent exempt from sales tax liability. Ultimately, the appeal was dismissed, affirming the decision in favor of the respondent-assessee.
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