1974 (1) TMI 100 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction and competence of the market committee to pass the impugned resolution.
2. Conflict between the impugned resolution and the Andhra Pradesh General Sales Tax Act, 1957.
3. Impact of the resolution on commission agents and their right to reimbursement.
4. Market committee's authority to regulate business practices within the notified area.
5. Allegations of fraudulent practices by commission agents and the market committee's role in addressing them.

Detailed Analysis:

1. Jurisdiction and Competence of the Market Committee:
The primary issue was whether the market committee of Kamareddy had the jurisdiction or competence to pass the resolution directing commission agents to collect sales tax from buyers instead of sellers. The court concluded that the market committee lacked such jurisdiction. The judgment stated, "On a close and careful reading of the provisions of the Markets Act and the Rules made thereunder, we do not find any provision empowering the market committee to regulate the mode and manner of levy or collection of sales tax in respect of transactions of sale within the notified area."

2. Conflict with the Andhra Pradesh General Sales Tax Act, 1957:
The resolution was challenged on the grounds that it conflicted with Section 11 of the Sales Tax Act, which allows commission agents to seek reimbursement of sales tax paid from their principals. The court held, "The impugned resolution is undoubtedly opposed to the provisions of section 11 of the Sales Tax Act and, therefore, it must be held to be without jurisdiction."

3. Impact on Commission Agents' Right to Reimbursement:
The court recognized the right of commission agents to be reimbursed for the sales tax paid by them on behalf of their principals. It was noted, "The valuable right vested in the commission agents to get the amount of sales tax paid by them reimbursed by their principals is being taken away by the impugned resolution."

4. Market Committee's Authority to Regulate Business Practices:
The respondents argued that the resolution was a form of regulation within the market area. However, the court found no provision in the Markets Act or the Rules that authorized the market committee to interfere with the levy or collection of sales tax. The judgment emphasized, "The market committee is authorized to supervise the conduct of the market functionaries. The plea advanced on behalf of the respondents that what has been done by the market committee in passing the impugned resolution is nothing but a kind of regulation in the conduct of business within the notified area and, therefore, the impugned resolution is valid, cannot be sustained."

5. Allegations of Fraudulent Practices by Commission Agents:
The court addressed the argument that the resolution aimed to curb fraudulent practices by commission agents. It was noted that the market committee had other means to address such issues, such as refusing to grant licenses to undesirable persons or suspending/canceling licenses. The judgment stated, "The market committee, which is empowered to regulate the business within the market area, can limit the number of commission agents and select only such persons who are reputed to be honest, efficient and business-like."

Conclusion:
The court concluded that the impugned resolution was illegal, without jurisdiction, and unenforceable. The judgment stated, "For all the reasons stated, we have no hesitation to hold that the impugned resolution is illegal, without jurisdiction and unenforceable and is liable to be quashed." Consequently, the writ appeals and the writ petition were allowed with costs.

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