1978 (3) TMI 206 - HC - VAT and Sales Tax

Summary

Issues:
1. Applicability of section 6-A of the Andhra Pradesh General Sales Tax Act to the petitioners' purchase of gold and silver ornaments for manufacturing standard bars.
2. Tax liability under section 6-A for purchases made from non-dealers.
3. Interpretation of the legislative intent behind the omission of certain words in clause (ii) of section 6-A.
4. Comparison of section 6-A with similar provisions in the Madras and Kerala General Sales Tax Acts.
5. Assessment of the tax liability under section 5-A in relation to the turnover under section 6-A.

Analysis:
The petitioners, a jewellers' firm, filed a petition seeking a writ of mandamus to prevent the application of section 6-A of the Andhra Pradesh General Sales Tax Act to their purchase of gold and silver ornaments used in manufacturing standard bars. The petitioners contended that since they bought the ornaments from non-dealers, section 6-A should not be applicable to them. However, the respondents argued that even if the sellers were not dealers, the petitioners were still liable to pay purchase tax under section 6-A(ii) as the goods purchased were taxable. The court examined the legislative intent behind the introduction of section 6-A to prevent tax evasion by dealers purchasing taxable goods, whether from registered dealers or non-dealers.

The court analyzed the language of section 6-A and noted that the omission of certain words in clause (ii) compared to clause (i) did not alter the tax liability for purchases from non-dealers. The court emphasized that the provisions of section 6-A must be read as an integrated scheme to prevent tax evasion effectively. The court also compared the provisions of section 6-A with similar clauses in the Madras and Kerala General Sales Tax Acts to support its interpretation of the legislative intent behind section 6-A.

Regarding the tax liability under section 5-A, the court referred to a previous decision where it was established that section 5-A was a charging section for additional levy, and the turnover in question was indeed liable to tax under section 5-A. The court dismissed the writ petition, upholding the tax liability of the petitioners under section 6-A and section 5-A of the Act. The judgment highlighted the importance of preventing tax evasion and ensuring the proper application of tax laws to maintain the integrity of the taxation system.