1982 (9) TMI 215 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutional validity of section 6-A of the Andhra Pradesh General Sales Tax Act, 1957.
2. Scope and ambit of section 6-A of the Act.
3. Definition and classification of "dealer" under section 2(1)(e) of the Act.
4. Applicability of section 6-A(ii)(a) concerning consumption of goods in the manufacture of other goods.

Summary:

1. Constitutional Validity of Section 6-A:
The petitioners challenged the constitutional validity of section 6-A of the Andhra Pradesh General Sales Tax Act, 1957, arguing that it discriminates between unregistered dealers or non-dealers and registered dealers, thus violating article 14 of the Constitution. This contention was dismissed based on a precedent set by a Division Bench in Hindustan Milkfood Manufacturers Ltd. v. State of Andhra Pradesh, which upheld the differential treatment as reasonable and having a rational relation to the object of taxation.

2. Scope and Ambit of Section 6-A:
Section 6-A imposes a tax liability on dealers who purchase goods either from registered dealers under circumstances where no tax is payable or from unregistered dealers and then consume or dispose of such goods. The court emphasized that to incur liability under this section, the person must be a "dealer" as defined in the Act and must have purchased goods under the specified conditions.

3. Definition and Classification of "Dealer":
The petitioners argued that they are not "dealers" as they are building contractors who construct flats and do not engage in the business of selling goods. The court, however, held that the petitioners are "dealers" within the meaning of section 2(1)(e) of the Act, as they purchase materials like sand and bricks in connection with their main business of constructing flats. The court cited the Supreme Court's decision in State of Andhra Pradesh v. H. Abdul Bakshi, which clarified that a person who consumes a commodity bought in the course of trade is regarded as a dealer.

4. Applicability of Section 6-A(ii)(a):
The court examined whether the petitioners' case falls within the ambit of section 6-A(ii)(a), which pertains to the consumption of goods in the manufacture of other goods for sale. The court concluded that the goods purchased by the petitioners (sand, bricks, etc.) are used in the construction of flats and not in the manufacture of other goods. The court relied on the Supreme Court's decision in Deputy Commissioner of Sales Tax (Law), Board of Revenue v. Pio Food Packers, which held that to attract the provisions of section 6-A(ii)(a), there must be consumption of the original goods for the purpose of manufacture. Since the petitioners do not manufacture other goods, they are not liable to tax under section 6-A(ii)(a).

Conclusion:
The writ petitions were allowed, and the notices issued to the petitioners were quashed. The court rejected the Government Pleader's request for leave to appeal to the Supreme Court, stating that no substantial question of law of general importance was involved.