1983 (9) TMI 263 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of additional sales tax on the assessee for the assessment year 1975-76.
2. Whether the assessee, acting as an agent for principals with turnovers less than Rs. 10,00,000, is liable to pay additional sales tax.

Detailed Analysis:
1. The High Court of Madras addressed the issue of the levy of additional sales tax on the assessee for the assessment year 1975-76. The assessee, engaged in the business of beedi leaves, declared a total and taxable turnover of Rs. 10,08,620.79, which was later determined to be Rs. 10,08,622 by the assessing authority. An additional tax of Rs. 4035 was levied on the assessee, leading to an appeal to the Tribunal. The Tribunal upheld the levy of additional tax on the assessee, dismissing their appeal. The assessee then approached the High Court challenging the Tribunal's decision.

2. The crucial issue was whether the assessee, acting as an agent for principals with turnovers less than Rs. 10,00,000, is liable to pay additional sales tax. The relevant provision, section 2(1) of the Tamil Nadu Additional Sales Tax Act, 1970, stipulated that if a dealer's total turnover exceeds Rs. 10,00,000, additional tax at the rate of ten per cent of the tax payable for that year shall be levied. The Court emphasized that the liability to pay additional sales tax is imposed on the dealer in whose hands the sales tax had been levied under the principal Act. The Court clarified that once the assessee is assessed to sales tax under the principal Act, they automatically become liable to pay additional tax as per the specific provision of section 2(1) of the Additional Sales Tax Act. The Court highlighted that the focus should be on whether the person on whom additional tax is sought to be levied had sales tax assessed on them and whether their total turnover exceeds Rs. 10,00,000. In this case, the assessee's total turnover exceeded the threshold amount, making them liable for additional tax regardless of the turnover of their principals.

In conclusion, the High Court dismissed the tax case, concurring with the Tribunal's decision. The Court emphasized that the levy of additional tax is automatic once the original assessment to sales tax has been made on a person with a turnover exceeding Rs. 10,00,000, without the need to distinguish between the turnover of the assessee and their principals.