1983 (12) TMI 272 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether purchases made by the assessee from two persons constitute second purchases and exempt from tax liability.
2. Whether the Tribunal's decision regarding the tax liability on second sales is correct.
3. Whether the dealers from whom the assessee made purchases were genuine registered dealers or bill traders.

Analysis:
The judgment involves two tax revision cases where the State challenged the order of the Sales Tax Appellate Tribunal. The dispute pertained to the assessment year 1978-79 and the turnover related to purchases of rubber from two individuals, Thompson and Jacob. The assessing authority considered the assessee as the first purchaser in the State, leading to a tax liability. The Appellate Assistant Commissioner upheld this view but made an ad hoc addition to the turnover. The Tribunal, however, ruled in favor of the assessee, declaring the purchases as second purchases and hence not taxable. Additionally, the Tribunal rejected the ad hoc addition made by the Appellate Assistant Commissioner.

The main issue before the High Court was whether the Tribunal's decision on the tax liability of second sales was correct. The Tribunal had established that Thompson and Jacob were registered dealers with valid licenses and registration certificates. The sale bills issued by them contained necessary details and a certification that tax had been paid at the first sale. The Revenue's argument that the dealers purchased rubber from unknown sources was dismissed by the Tribunal. The High Court concurred with the Tribunal's findings, emphasizing that if the assessee's purchases were second purchases from registered dealers, they could not be taxed under the relevant section of the Act. The responsibility to collect tax from the first purchaser rested with the Revenue, and exempting second sales from tax was consistent with the statute.

The State attempted to rely on a previous Tribunal order labeling Jacob as a bill trader. However, the High Court noted that Jacob's status in a different assessment year did not automatically apply to the current case. The evidence for the year in question indicated that both Thompson and Jacob were genuine dealers licensed to deal in rubber. The absence of proof that they were bill traders for the relevant year led the High Court to uphold the Tribunal's decision. Consequently, the High Court dismissed the tax revision cases, affirming the Tribunal's ruling and rejecting the State's challenge.