1970 (11) TMI 96 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of the petitioner to pay state tax on transactions involving declared goods sold in the course of inter-State trade.
2. Interpretation of Section 15(b) of the Central Sales Tax Act and Proviso to Section 6 of the Andhra Pradesh General Sales Tax Act.
3. Applicability of Rule 27-A of the A.P. General Sales Tax Rules regarding refund of tax.
4. Validity of the Tribunal's decision exempting declared goods from state tax.

Issue-wise Detailed Analysis:

1. Liability of the petitioner to pay state tax on transactions involving declared goods sold in the course of inter-State trade:
The petitioner, a registered dealer under the A.P. General Sales Tax Act, argued that sales within the state should not be taxed if the goods were subsequently sold in inter-State transactions. The court rejected this contention, affirming that declared goods are taxable under state law even if sold later in inter-State trade. The court emphasized that the tax must be paid first and then a refund can be claimed if the goods are sold in inter-State trade.

2. Interpretation of Section 15(b) of the Central Sales Tax Act and Proviso to Section 6 of the Andhra Pradesh General Sales Tax Act:
Section 15(b) of the Central Sales Tax Act stipulates that if tax has been levied on declared goods within a state and these goods are sold in inter-State trade, the tax must be refunded. The proviso to Section 6 of the A.P. General Sales Tax Act aligns with this, stating that tax levied on such goods should be refunded if sold in inter-State trade. The court clarified that "levied" means the tax must be imposed, assessed, and collected before a refund can be claimed, rejecting the petitioner's argument that no tax should be levied initially.

3. Applicability of Rule 27-A of the A.P. General Sales Tax Rules regarding refund of tax:
Rule 27-A outlines the procedure for claiming a refund, requiring the dealer to file an application within three months from the end of the month in which the goods were sold. The dealer must prove entitlement to the refund. The court highlighted that the tax must be paid first, and only then can a refund be claimed, provided the conditions of Rule 27-A are met.

4. Validity of the Tribunal's decision exempting declared goods from state tax:
The Tribunal had previously decided that tax on declared goods should be levied and collected only under the Central Sales Tax Act, not the state act. The court found this decision incorrect, stating that the state is entitled to levy tax on such transactions, and a refund can be claimed if the goods are sold in inter-State trade. The Tribunal's order exempting the turnover from state tax was set aside.

Conclusion:
The court dismissed the writ petition, upholding the state's right to levy tax on declared goods sold within the state, even if subsequently sold in inter-State trade. The petitioner must pay the tax and then claim a refund. The Tribunal's decision exempting such transactions from state tax was invalidated. The writ petition was dismissed with costs, and the tax revision case was allowed, also with costs.