1961 (12) TMI 75 - HC - VAT and Sales Tax

Summary

Issues:
Validity of assessment under Mysore Sales Tax Act for the turnover of a dealer in cotton seeds and groundnuts, applicability of Central Sales Tax Act restrictions on sales tax, interpretation of Section 5(4) of Mysore Act regarding taxation on last purchase in assessment year.

Analysis:
The petitioner, a dealer in cotton seeds and groundnuts, challenged the assessment by the Commercial Tax Officer under the Mysore Sales Tax Act for the turnover in question. The petitioner did not contest the turnover determination but argued that the amount from sales after the assessment year should not be taxable due to the restrictions imposed by the Central Sales Tax Act. The contention was based on the declaration of groundnuts as "declared goods" under both Acts, subjecting them to specific taxation conditions.

The Central Sales Tax Act limits the tax on declared goods to 2% of the sale price and prohibits taxation at more than one stage. The critical issue was whether the tax levied on the petitioner's turnover violated this provision. The Commercial Tax Officer found that the petitioner was the last purchaser of groundnuts during the assessment year, and the tax was imposed on that purchase. The petitioner's subsequent sale of part of the purchased goods did not attract additional tax, as the goods were not resold by the subsequent buyer within the same year.

The interpretation of Section 5(4) of the Mysore Act was crucial in determining the tax liability. The section specifies that tax shall be levied on the last purchase of declared goods in the assessment year. The court held that the tax liability is on the last purchase in the assessment year, irrespective of any subsequent sales, as long as the goods are not resold within the same year. This interpretation aimed to prevent cascading taxation and ensure clarity in tax liability determination.

The court rejected the petitioner's argument that the tax should apply only to the last purchase in the entire chain of transactions. Refunds for tax collected on subsequent sales were deemed outside the scope of the current case. The judgment emphasized adherence to statutory provisions and consistency in tax assessment practices. The petition was dismissed, affirming the validity of the assessment under the Mysore Sales Tax Act.