2003 (9) TMI 737 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to assessment order under Assam General Sales Tax Act, 1993 for the years 1994-95 and 1996-97.
2. Claim of exemption from sales tax based on Assam Industries (Sales Tax Concessions) Scheme, 1995.
3. Interpretation of liability to pay sales tax on the last point of sale.
4. Reference to the decision of Pine Chemicals Ltd. case.

Analysis:

1. The two petitioners, registered dealers under the Assam General Sales Tax Act, challenged the assessment orders for the years 1994-95 and 1996-97. Petitioner No. 2, engaged in tea manufacturing, claimed exemption from sales tax as per the Assam Industries (Sales Tax Concessions) Scheme, 1995, on the sale of tea to Petitioner No. 1 for further trade. The orders were contested before the Assistant Commissioner of Taxes, Assam, in revision petition.

2. The petitioners argued that Petitioner No. 2, covered by the Assam Industries (Sales Tax Concessions) Scheme, should not be liable to pay sales tax on raw material purchases or finished product sales. Petitioner No. 1, the tea trader, contended that tax liability on the purchased tea should not apply due to the scheme. However, the tax department denied the exemption, stating that tax was due at the last point of sale, irrespective of the scheme benefits enjoyed by the purchaser.

3. The court clarified that under the Act, tea is taxable at the last point of sale. Therefore, the sale from Petitioner No. 2 to Petitioner No. 1 constituted the first point of sale, making the exemption irrelevant. Section 3 of the Act specified that tax liability arises only at the final sale point. The scheme benefits availed by the purchaser did not affect the tax obligation at the last sale point, as emphasized by the court.

4. The petitioners cited the Pine Chemicals Ltd. case, but the court found it unsupportive of their claim. Ultimately, the court dismissed the writ petition, affirming that Petitioner No. 2 was rightly held liable for sales tax as determined by the tax authority. The judgment upheld the tax liability based on the last point of sale, disregarding the scheme benefits enjoyed by the purchaser.

In conclusion, the court's decision emphasized the legal obligation to pay sales tax at the final sale point, regardless of any concessions or benefits enjoyed by the purchaser. The judgment underscored the statutory framework governing tax liability and upheld the assessment order, dismissing the petitioners' challenge.