1996 (8) TMI 503 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether growers of rubber can be called upon to register themselves as dealers under the Tamil Nadu General Sales Tax Act, 1959.

Analysis:
The primary issue in this case revolved around whether the petitioners, who claimed to be rubber growers, could be classified as dealers under the Tamil Nadu General Sales Tax Act, 1959. The petitioners argued that their activities as agriculturists in producing rubber should not be considered a business activity, and thus, they should not be required to register as dealers. However, the court referred to a Division Bench decision that established even a casual trader could be considered a dealer under the Act, irrespective of whether the transactions were taxable. The court emphasized that registration was necessary to track assessable transactions for effective tax collection, and being registered did not automatically render transactions taxable. The court dismissed the writ petition, holding that the petitioners must register as dealers unless it was proven that their transactions were taxable under the Act.

Another issue raised was the reliance on Supreme Court decisions regarding the business activities of rubber producers. The petitioners cited cases where the burden of proving business activities was on the tax authorities, and mere registration as a dealer was not conclusive evidence of tax liability. The court acknowledged these precedents but noted that the burden of proving business activities would lie with the tax authorities during assessment proceedings. The court emphasized that registration alone did not determine tax liability, and the question of taxable turnover would be assessed separately during proceedings. Consequently, the court dismissed the writ petitions but clarified that the petitioners could still challenge the tax liability of their transactions during assessment proceedings, with the burden of proof resting on the tax authorities.