2009 (2) TMI 790 - HC - VAT and Sales Tax

No Purchase tax under section 5A on the turnover of bullion purchased from non-resident Indians as decided by Tribunal - Held that - Allow the tax revision cases by setting aside the order of the Tribunal and remand the matter to the assessing officer for giving opportunity to the respondent to produce purchase vouchers or sale bills pertaining to purchase of bullion from non-residents containing the names and addresses and proof of sellers identity for the assessing officer to conduct enquiry and to exclude so much of the purchases from nonresidents who were liable to pay tax under section 5(1) of the Act. We make it clear that merely because sellers who are liable under section 5(1) are not assessed or cannot be assessed on account of limitation is not a ground for fastening liability on the respondent under section 5A. The respondent is given two months time from the date of receipt of a copy of this judgment for furnishing particulars and records before the assessing officer. However if no proof is produced within the period granted above towards proof of purchase with names and addresses of the non-residents then the assessment made under section 5A will stand confirmed.

Summary

The Kerala High Court delivered a judgment on a case filed by the State against an order of the Sales Tax Appellate Tribunal. The Tribunal had ruled that the respondent was not liable to pay purchase tax on bullion bought from non-resident Indians. The State argued that the purchases were taxable under section 5A as they were used in manufacturing ornaments subsequently sold by the respondent. The court disagreed with the Tribunal's decision, stating that purchase tax is applicable if the commodity is taxable and the purchase occurs under circumstances where no tax is payable by the seller. The court cited previous decisions to support its stance. It further ruled that the respondent must provide proof of purchase from non-residents to show that the sellers were liable to pay tax under section 5(1) in order to escape liability under section 5A. The case was remanded to the assessing officer for further investigation, with the respondent given two months to produce necessary documentation. Failure to do so would confirm the assessment under section 5A. The court emphasized that the inability to assess sellers due to limitations is not a valid reason to impose liability on the respondent.