1995 (11) TMI 429 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the definition of "tax-paid goods" under section 2(rr) of the M.P. General Sales Tax Act.
Determining the tax liability on a matador purchased from an unregistered dealer.

Analysis:
The judgment of the High Court of Madhya Pradesh pertains to a reference application made by the Sales Tax Commissioner under section 44 of the M.P. General Sales Tax Act. The Tribunal referred a question of law regarding the tax liability of a matador purchased from an unregistered dealer and subsequently sold. The question was whether such a matador would be considered "tax-paid goods" under section 2(rr) of the Act and entitled to deduction under section 2(r)(ii).

The assessee, a dealer in agarbattis, had sold a matador vehicle but did not include the sale price in its turnover. Upon inspection, it was revealed that the matador was purchased from an unregistered dealer, leading to the reopening of assessment under section 19(1) of the Act. The assessee contended that since the matador was purchased from an unregistered dealer who had acquired it from a registered dealer, it should be considered tax-paid goods. However, the department assessed the sale price for tax at 10.5% and imposed a penalty.

The High Court analyzed the definition of "tax-paid goods" under section 2(rr) of the Act, which requires the specified goods to be purchased from a registered dealer within the state. Since the matador in question was bought from an unregistered dealer, it did not meet this criterion. The Court noted that the assessee did not contest the issue or provide evidence to support the claim that the matador qualified as tax-paid goods under the Act.

Consequently, the High Court held that the matador could not be classified as "tax-paid goods" based on the facts of the case. The question posed in the reference application was answered in the negative, favoring the Revenue. The order was to be sent to the Tribunal as per the provisions of the Act, and the reference application was disposed of without any costs being awarded.

In summary, the judgment clarifies the interpretation of the term "tax-paid goods" under the M.P. General Sales Tax Act and establishes that goods purchased from unregistered dealers do not qualify for such classification, leading to tax liability.