1989 (1) TMI 321 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the definition of "dealer" in the Andhra Pradesh General Sales Tax Act.
Liability of an agent for tax when representing multiple principals with turnovers below the prescribed limit.
Validity of the amendment to section 11 of the Act regarding the liability of agents.

Analysis:
The judgment of the Andhra Pradesh High Court in this tax revision case revolved around the interpretation of the definition of "dealer" in the Andhra Pradesh General Sales Tax Act and the liability of an agent for tax when representing multiple principals with turnovers below the prescribed limit. The case stemmed from an appeal by a dealer who questioned the levy of tax on a specific turnover amount. The Tribunal, relying on a previous court decision, held that the agent cannot be made liable if the turnover of each principal is below the prescribed limit, as the agent's liability is coextensive with that of the principal.

The State contended that an amendment to the definition of "dealer" in the Act was intended to make agents liable for tax even when representing multiple principals with turnovers below the limit. However, the Court disagreed with this interpretation, emphasizing that the agent's liability is contingent on the principal's liability. The Court referred to previous court decisions and legislative amendments to support the principle that the agent cannot be made liable unless the principal is also liable.

The Court discussed the history of legislative amendments and court decisions related to the liability of agents and principals for tax under the Act. It highlighted that while amendments were made to make principals liable in certain cases, such provisions did not extend to all types of goods. Therefore, in cases where the principal's turnover does not exceed the prescribed limit, the agent cannot be held liable for tax, even if representing multiple principals. The Court upheld the Tribunal's decision and dismissed the tax revision case, emphasizing that the agent's liability is tied to the principal's liability under the Act.