1978 (9) TMI 164 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of provisions under section 3-D and section 4-B for taxation on purchases made by a purchasing agent acting on behalf of mills holding certificates under section 4-B(2).
Determining the eligibility of the assessee for a concessional rate of tax under section 4-B without holding a recognition certificate under section 4-B(2).

Analysis:
The judgment dealt with the case of an assessee who acted as a purchasing agent for mills manufacturing oil from oil-seeds and holding certificates under section 4-B(2) for concessional tax rates. The assessee contended that purchases made on behalf of the mills should be taxed at a concessional rate, but this was rejected by the Sales Tax Officer and the appellate authority, and accepted by the revising authority. The standing counsel for the department argued that as the assessee did not hold a certificate under section 4-B(2) in his name, he was not entitled to a concessional rate of tax. The court analyzed sections 3-D and 4-B of the Act to resolve the dispute.

Section 3-D levies a tax on the turnover of first purchases made by a dealer or through a purchasing agent acting on his behalf. The explanation in the provision deems the purchasing agent as the first purchaser if not a licensed dealer. As the assessee was not a licensed dealer, he was treated as the first purchaser and liable to pay purchase tax under section 3-D(1), regardless of reimbursement from the principals. Section 4-B allows for a concessional rate only for those with a recognition certificate under section 4-B(2), which the assessee did not possess. Therefore, the court held that the assessee was not entitled to any concessional tax as the conditions under section 4-B were not met.

The court emphasized that section 4-B confers a specific benefit on the assessee, which can only be availed if all requirements are satisfied. The legislative intent of granting relief under section 4-B was found to be limited to those with a recognition certificate. The contention that the advantage of the certificate granted to the manufacturer could be extended to the purchasing agent was dismissed. Consequently, the revision was allowed, the decision of the Judge (Revisions) was reversed, and costs were awarded to the department.