- (1.) The appellants are the growers of coffee. They filed writ petitions for injuncting the Coffee Board Respondent 1 (hereinafter referred to as 'the Board') from making any payment under the head "purchase tax" out of the Pool Fund maintained under Section 30 of the Coffee Act, 1942. According to the appellants, the Board cannot discharge its liability in respect of payment of "purchase tax" to the State government, under the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as 'the Act') out of the Pool Fund.
(2.) The High Court held that growers/producers were not liable under Section 5 (3 (a) of the Act to pay the tax in respect of the sale of coffee bythem to the Coffee Board. It also held that the Board was liable to pay the "purchase tax" under Section 6 of the Act. But according to the High court, the Board was authorised in law to pay the tax which it is liable to pay to the State government, out of the Pool Fund. On that finding, the writ petitions, filed on behalf of the appellants, were dismissed.
(3.) Section 5 (3 (a) of the Act provides that the tax under the Act shall be levied in the case of sale of goods mentioned in Column 2 of the Second Schedule to that Act by the first or the earliest of the successive dealers in the State who is liable to tax under the said section, on the taxable turnover of sale of such dealer in each year relating to such goods. The coffee is included in Entry 43 of the Second Schedule in the Act. The expression 'dealer' has been defined in Section 2 (k) of the Act. The relevant portion of the definition along with exception is as follows: "2.(K) 'dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes * * * Exception. An agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally shall not be deemed to be a dealer within the meaning of this clause. "it need not be pointed out that in view of the exception aforesaid, as the growers of the coffee are statutorily required to sell the coffee to the Board, they shall not be liable to pay the sales tax as prescribed under Section 5 (3 (a) of the Act. However, the purchasers which in the present case, shall include the Board, are made liable to pay the tax under Section 6 of the Act. The relevant part of Section 6 says: "6.Levy of purchase tax under certain circumstances. Subject to the provisions of Ss. (5 of Section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under Section 5 is leviable on the sale price of such goods, and (i) either consumes such goods in the manufacture of other goods for sale or otherwise (or consumes otherwise) or disposes of such goods in any manner other than by way of sale in the State, or (ii) dispatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under Section 5. " There was a controversy as to whether the Board shall be liable to pay the purchase tax under Section 6 of the said Act. However, that was settled by 315 this court in the case of Coffee Board v, Commr. of Commercial Taxes. It was held by this court that Section 6 was applicable to the transactions entered into between the Board and the growers of the coffee and the Board was liable to pay the "purchase tax".;