1990 (9) TMI 305 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the petitioner-company's turnover is subject to sales tax for the assessment year 1975-76.
2. Whether the sale in favor of the Joint Director of Food and Civil Supplies, Government of Karnataka, is liable to tax.
3. Whether the petitioner-company is exempt from sales tax as it acted as an agent of the State Government.

Analysis:
1. The petitioner-company, a procuring agent under foodgrains levy orders, contested the refusal to accept sales in favor of the Joint Director, resulting in a turnover subject to tax. The company argued that transfers were not sales due to government instructions. However, the assessing authority rejected this argument, leading to appeals and the current revision petition. The turnover in question was deemed liable for tax assessment.

2. The Court examined whether the sale to the Joint Director constituted a taxable event. Despite arguments that the company acted solely on government instructions and was merely an agent, the Court found that the sale was indeed a taxable transaction. The Court referenced relevant legal provisions and previous judgments to establish the tax liability of the company for the sale in question.

3. The Court analyzed the company's claim of exemption from sales tax as an agent of the State Government. The Court distinguished the company's role as a procuring agent with ownership of procured foodgrains, leading to subsequent sales. The Court highlighted the statutory provisions mandating sales tax collection by the procuring agent, emphasizing the company's duty to collect tax despite any misconceptions or circulars suggesting otherwise. Ultimately, the Court dismissed the revision petition, holding the company liable for the assessed tax amount.