1963 (5) TMI 49 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether there was any evidence to support the finding that the assessee was carrying on business as a dealer and not as a commission agent.
2. Whether obtaining a licence under section 6 on 26th November 1949 exempted the assessee from liability to sales tax for the entire assessment year 1949-50.
3. Whether the assessee was liable to pay a licence fee only or sales tax on his turnover as an assessee, considering the provisions of section 21 as it stood on the date of assessment.

Issue-wise Detailed Analysis:

1. Evidence Supporting Assessee as Dealer:
The assessee, a commission agent (kachcha arhatia), was assessed as a pakka arhatia. The court examined whether there was evidence to support this classification. It was found that the assessee recorded transactions as if it purchased goods from sellers and sold them to buyers, paying sellers and receiving payments from buyers. The transactions were not simultaneous, indicating that the assessee bought and sold goods rather than merely arranging transactions. This evidence legally supported the finding that the assessee acted as a pakka arhatia. The court clarified that the presence of material supporting the finding was sufficient, even if there was contrary evidence. Therefore, the answer to the first question was "Yes."

2. Licence Exemption under Section 6:
Section 6 allows the Provincial Government to grant a licence to a commission agent and exempt transactions carried out in accordance with the licence terms from tax. The court noted that exemption applies only to transactions conducted after the licence is granted. Since the assessee obtained the licence on 26th November 1949, transactions before this date could not be exempted. The court emphasized that a licence is granted upon application and fee payment, and exemption cannot be retroactive. Consequently, the court answered the second question as "No," indicating that the assessee was exempted from tax liability only for transactions conducted after 26th November 1949.

3. Liability for Licence Fee or Sales Tax:
Section 21 addresses the procedure for recovering licence fees if they have escaped levy. The court explained that the licence fee is based on the net turnover of the entire assessment year, regardless of the licence's effective date. The assessee's contention that the Sales Tax Officer should recover the licence fee for the period before 26th November 1949 was dismissed. The court clarified that the licence fee is calculated on the net turnover of the whole year, and the date of the licence is relevant only for determining tax exemption under section 6. Therefore, the assessee was liable to pay sales tax on transactions before 26th November 1949, and there was no question of additional licence fee recovery. The court answered the third question by stating that the assessee was liable to pay sales tax on the turnover, not just the licence fee.

Conclusion:
The court concluded that the assessee was a dealer liable to pay sales tax under section 3, except for transactions exempted under section 6 after obtaining the licence on 26th November 1949. The court directed copies of the judgment to be sent to relevant authorities and assessed costs and counsel's fees.

Reference Answered Accordingly.