1988 (10) TMI 270 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the petitioner is a "dealer" under section 2(g) of the Tamil Nadu General Sales Tax Act.
2. Whether the petitioner is liable for sales tax assessment for the year 1986-87.
3. The impact of the petitioner's prior acceptance of sales tax liability.
4. The availability and necessity of alternative remedies under the Act.
5. The maintainability of the writ petition under article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Whether the petitioner is a "dealer" under section 2(g) of the Tamil Nadu General Sales Tax Act:
The primary issue was to determine if the petitioner, a turmeric commission agent, qualifies as a "dealer" under section 2(g) of the Tamil Nadu General Sales Tax Act. The definition includes any person who carries on the business of buying, selling, supplying, or distributing goods, including commission agents, brokers, or auctioneers. The court examined the modus operandi of the petitioner, noting that the petitioner merely facilitated the auction of turmeric brought by agriculturists, without having any role in determining the price or selling the goods. The petitioner issued receipts and deducted charges before paying the balance to the agriculturists. Based on these facts, the court concluded that the petitioner did not have the authority to transfer property in the goods and thus did not qualify as a "dealer."

2. Whether the petitioner is liable for sales tax assessment for the year 1986-87:
Given the conclusion that the petitioner is not a "dealer," the court held that the petitioner is not liable for sales tax assessment for the year 1986-87. The court referred to previous decisions, including Tiruchengode Co-operative Marketing Society Limited v. State of Tamil Nadu and Karelal Kundanlal Trust v. Commissioner of Sales Tax, which supported the view that intermediaries who do not have dominion over the goods and merely facilitate sales are not liable for sales tax.

3. The impact of the petitioner's prior acceptance of sales tax liability:
The respondent argued that the petitioner's prior acceptance of sales tax liability indicated an admission of being a dealer. The court rejected this contention, citing the principle that there is no estoppel against a statute, especially a fiscal statute. The court referenced Karelal Kundanlal Trust v. Commissioner of Sales Tax and Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh to support the view that prior acceptance of tax liability does not prevent the petitioner from challenging the assessment based on the correct legal position.

4. The availability and necessity of alternative remedies under the Act:
The respondent contended that the petitioner should have availed of the alternative remedies under the Act, such as appeals. The court noted that this contention was not specifically raised in the counter-affidavit and emphasized that the availability of alternative remedies is not an absolute bar to the maintainability of a writ petition. The court highlighted that the issue of whether the petitioner is a "dealer" is a jurisdictional fact, which can be examined by the High Court in a writ petition.

5. The maintainability of the writ petition under article 226 of the Constitution of India:
The court upheld the maintainability of the writ petition, emphasizing that the respondent-Deputy Commercial Tax Officer failed to follow the binding precedent set by the High Court in similar cases. The court cited the Supreme Court's decision in East India Commercial Co. Ltd. v. Collector of Customs, Calcutta, which mandates that law declared by the High Court is binding on lower courts and tribunals within its jurisdiction. The court exercised its extraordinary jurisdiction under article 226 to quash the impugned assessment order.

Conclusion:
The writ petition was allowed, and the assessment order levying sales tax on the petitioner for the year 1986-87 was quashed. The court ruled that the petitioner is not a "dealer" within the meaning of section 2(g) of the Tamil Nadu General Sales Tax Act and is not liable for sales tax. The court also upheld the maintainability of the writ petition, rejecting the respondent's contentions regarding alternative remedies and prior acceptance of tax liability.

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