1956 (4) TMI 37 - HC - VAT and Sales Tax

Summary

Issues:
- Determination of whether the appellant is the first dealer in silk cloth in Hyderabad State and liable to pay tax at an additional rate.

Detailed Analysis:
The appeal was filed by M/s. D.R. Sambiah against the order of the Deputy Commissioner, Appellate, who disallowed his appeal. The appellant, a dealer in silk cloth, argued that being a second dealer in silk cloth in the State, he should be taxed at the general rate on his turnover, not the additional rate as determined by the Sales Tax Officer and Deputy Commissioner, Appellate. The main issue for consideration was whether the appellant qualifies as the first dealer in silk cloth in Hyderabad State under the Hyderabad General Sales Tax Act of 1950. The relevant rule, Rule 7, states that the tax specified in the Act applies at the stage of sale by the first dealer in such goods, with the burden of proof on the dealer to show the transaction is not taxable. Section 4(2) of the Act imposes an additional tax on specified goods, including silks, at a particular rate.

The appellant contended that since he purchased silk cloth from merchants outside the State but took delivery in Hyderabad, the non-resident seller should be considered the first dealer, making him the second dealer. However, it was clarified that for the purposes of the Act, a non-resident seller does not qualify as a dealer. The definition of "dealer" under the Act refers to a person engaged in buying, selling, or supplying goods within the State, while a non-resident dealer is someone who resides outside the State but conducts business within it. The physical presence in the State is crucial for being recognized as a dealer, as established in previous judgments like J.L. Morrison v. Sales Tax Officer & Others, U.P.

The court distinguished the present case from the V.O. Vakkan v. State of Madras ruling, where the non-resident seller physically entered the State to execute sales contracts. In this case, the non-resident merchant did not visit Hyderabad State for business purposes. Consequently, the court dismissed the appeal, affirming that the appellant is indeed the first dealer in the State concerning the turnover of silk cloth, and therefore liable to pay tax at the additional rate specified in the Act.