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2006 (8) TMI 575 - HC - VAT and Sales Tax
Issues:
Levy of turnover tax on sales turnover of tea. Analysis: The main issue in this case was whether the Tribunal was justified in confirming the levy of turnover tax on the petitioner regarding the sales turnover of tea. The petitioner argued that since they purchased tea from tea auctioneers, who are second dealers liable to pay turnover tax, the petitioner, as a third seller, should not be liable to pay the tax. However, all authorities, including the Tribunal, found that there was no direct sale between the tea planter and the auctioneer, making the auctioneer's sale the first sale and the petitioner's sale the second, hence making them liable for the turnover tax. The turnover tax on tea was deemed payable at the point of the second sale in the State as per the Kerala General Sales Tax Act, 1963 and Government Notification S.R.O. No. 362 of 1992. The petitioner's counsel contended that since the auctioneer is a dealer under the KGST Act and the planter is also a seller, the sale by the second seller should be liable for turnover tax. However, the court rejected this argument, emphasizing that the turnover tax on tea is indeed payable at the point of the second sale in the State. It was established that the planters, who are registered dealers, only entrusted the tea to the auctioneer for sale, and there was no direct sale between the planters and the auctioneers. The auctioneers, being registered dealers, collected sales tax from the petitioner, treating the sales to the petitioner as first sales. Therefore, the petitioner, having paid tax at the first sale point on purchases from the auctioneer, could not claim that the same transaction was a second sale attracting turnover tax. Given the factual position that there were no direct sales between the planters and the auctioneers, and the auctioneers conducted sales as first sellers collecting sales tax on tea, which is taxable at the point of the first sale in the State, the petitioner's sales were deemed second sales liable for turnover tax. Consequently, the court found no basis to interfere with the Tribunal's order, and the sales tax revision case was dismissed.
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