2001 (12) TMI 855 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of purchase tax on a cooperative society engaged in marketing agricultural produce.
2. Interpretation of definitions of "dealer", "sale", and "turnover" post-amendment.
3. Point of levy of tax on groundnut under the Tamil Nadu General Sales Tax Act, 1959.
4. Determining the liability of tax on the first purchaser of goods.
5. Agency relationship between the cooperative society and agriculturist principals.
6. Challenge to the validity of Act No. 31 of 1992.

Analysis:
1. The judgment addressed the issue of the assessing officer levying purchase tax on a cooperative society, acting as an agent of agriculturist principals, for the assessment years 1992-93, 1994-95, and 1995-96. The authority considered the society liable to tax on all sales or purchases, overlooking the point of levy specified under the Tamil Nadu General Sales Tax Act, 1959.

2. Post-amendment, the assessing authority included the "person through whom the goods are bought, sold, supplied or distributed" in the definition of "dealer". However, the judgment highlighted that the society, as an agent, does not purchase the produce but facilitates sales on behalf of its members, making the first purchaser at the auction responsible for tax payment.

3. The court emphasized that the point of levy of tax on groundnut is at the point of first purchase in the State, not at the point of sale. This distinction is crucial in determining the tax liability and shifting the responsibility to the actual buyer at the auction conducted by the society.

4. Regarding the agency relationship between the society and agriculturist principals, the judgment clarified that the society acts as an agent authorized to transfer goods title on behalf of the members. This relationship does not constitute a sale from principal to agent, as the title passed on to the buyer belongs to the principal.

5. The Special Taxation Tribunal's observation regarding the transaction as a sale by the agriculturist principal to the society was deemed incorrect. The assessing officer's finding established the society as the agent of the principal, not the purchaser, leading to the setting aside of the impugned order of the Tribunal and the assessing officer.

6. While the petitioner challenged the validity of Act No. 31 of 1992, the court deemed it unnecessary to delve into its validity. Even assuming the Act's validity, the court concluded that the society cannot be taxed since it is not the purchaser, and the point of levy of tax is the first purchase. Consequently, the petitions were allowed, and the purchase tax levy on the society was set aside.