1995 (2) TMI 397 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of purchase tax under section 13 of the Bombay Sales Tax Act, 1959, on purchases from unregistered dealers.
2. Determination of whether the respondent was a dealer in the context of purchasing a car for business purposes.

Issue-Wise Detailed Analysis:

Issue 1: Applicability of Purchase Tax under Section 13
The primary question was whether the Tribunal was justified in holding that no purchase tax is leviable on the purchase of goods from a person who is not a registered dealer until the goods are resold or the possibility of their resale is ruled out. The Revenue argued that purchase tax under section 13 is payable by any dealer liable to pay tax under section 3 of the Act on purchases of taxable goods from an unregistered dealer, unless the goods are resold. The Tribunal, however, held that section 13 does not apply to all purchases from any person other than a registered dealer. It applies only to purchases from "dealers" who are "unregistered" or "not registered." The Court agreed, stating that the expressions "unregistered dealer" and "not a registered dealer" presuppose that the person concerned is a "dealer." Purchases from a person who is not even a dealer within the meaning of section 2(11) of the Act will not fall within the purview of section 13, and no purchase tax would be leviable in respect of such purchases.

The Court emphasized that the onus of proving that the person from whom the purchase was made was not a "dealer" lies on the assessee. If the assessee fails to satisfy the assessing authority, purchase tax would be leviable under section 13. The Court further clarified that section 13 is intended to levy tax only on purchases made by a dealer from another dealer who is not registered, to prevent tax evasion.

Issue 2: Determination of Dealer Status in Car Purchase
The second question was whether the Tribunal was correct in holding that the respondent was a dealer in the context of purchasing a car and whether the purchase was made in the course of business. The Court noted that the assessee was a dealer in PVC pipes, PVC compounds, and rigid pipes, not motor cars. Therefore, the purchase of the car was not made by the assessee as a dealer liable to pay tax under section 3 of the Act, as he does not carry on the business of selling and supplying cars. Additionally, the person from whom the car was purchased, Mr. Pareshkumar, was not a dealer within the meaning of section 2(11) of the Act, as he was not carrying on the business of selling or supplying cars.

The Court concluded that section 13 of the Act would not be attracted to the purchase in question, and no purchase tax could be levied on the assessee under the said section. The Tribunal was justified in holding that no purchase tax was leviable under section 13 of the Act on the purchase of the car, albeit for different reasons than those provided by the Tribunal.

Conclusion:
The Court reframed the question to accurately reflect the controversy and answered it in the affirmative, stating that no purchase tax was leviable under section 13 of the Act in respect of the purchases made by the assessee from a person who was not a dealer within the meaning of section 2(11) of the Act. The judgment was delivered without any order as to costs.