1997 (12) TMI 611 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether sales tax is liable to be paid on the transaction involving the purchase of beedi leaves by the petitioners.
2. Validity of the circular issued by the Commissioner of Commercial Taxes regarding the liability of sales tax.
3. Whether the writ petitions under Article 226 of the Constitution can properly decide the questions raised.
4. Whether the liability to pay sales tax was within the contemplation of the parties.
5. Whether the petitioners should be left remediless in questioning the collection of sales tax by the Corporation.

Analysis:
The petitioners, who are "beedi leaves contractors," sought writs to release abnus leaves without paying sales tax. The contracts involved pruning, collection, and transportation of leaves by the petitioners under agreements with the A.P. Forest Development Corporation. The petitioners argued that the transaction was not a sale but a profit-a-prendre, challenging the liability to pay sales tax. The circular issued by the Commissioner of Commercial Taxes was also challenged. The court declined to decide the issues under Article 226, noting the need for factual analysis and reference to relevant rules. The court emphasized that the liability to pay sales tax was contemplated in the agreement, leaving the issues to be decided by competent tax authorities.

The court highlighted the importance of allowing the petitioners to challenge the assessments made by the Corporation regarding sales tax. The court directed the assessing authority to finalize assessments within eight months, allowing objections from the petitioners. The Forest Development Corporation could question the assessment, providing copies to the petitioners for filing appeals. If the appellate authority finds no tax liability, the amount paid should be refunded to the petitioners. The court disposed of the writ petitions without costs, granting time for sales tax payment and providing directions for assessment proceedings and appeals, ensuring a remedy for the petitioners to challenge tax liabilities.