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1987 (4) TMI 462 - HC - VAT and Sales Tax
Issues: Interpretation of Section 6-A of Andhra Pradesh General Sales Tax Act regarding tax liability on purchase of goods from a registered dealer; applicability of clause (i) and clause (c) of section 6-A; determination of tax liability when tax was not collected by the selling agent due to specific circumstances.
In this judgment delivered by the Andhra Pradesh High Court, the petitioner purchased gum from a registered dealer who did not collect tax on the sale, claiming to act as an agent of agriculturist producers. The petitioner then dispatched the gum to other states for sale through agents. Initially, the turnover relating to the gum was exempted from tax as no sale was deemed to have occurred within the state. However, the assessment was later reopened, and the transaction was subjected to tax under section 6-A of the Andhra Pradesh General Sales Tax Act. The Tribunal held that tax was leviable based on clause (i) of section 6-A, which states that tax is payable when goods liable to tax are purchased from a registered dealer in certain circumstances. The Court rejected the petitioner's argument that clause (i) did not apply in this case, emphasizing that the provision aims to prevent tax evasion and hold the purchaser liable when tax is not collected due to specific circumstances, as clarified in a Supreme Court decision. The Court noted that the petitioner, as a dealer, purchased the goods from a registered dealer who did not collect tax due to acting as an agent, satisfying the conditions under section 6-A. Furthermore, the Court found that clause (c) of section 6-A was also met as the goods were dispatched by the petitioner to a place outside the state for sale. Consequently, the Tribunal's decision to subject the goods to tax under section 6-A was upheld, dismissing the petition with no costs awarded. The judgment underscores the legislative intent behind section 6-A to ensure tax compliance and prevent tax leakage, holding dealers accountable for tax liabilities even in cases where tax was not collected by the selling agent due to specific circumstances.
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