SAKALA VEERA BHADRAIAH AND CO Vs. STATE OF ANDHRA PRADESH
LAWS(APH)-1992-1-22
HIGH COURT OF ANDHRA PRADESH
Decided on January 22,1992

SAKALA VEERA BHADRAIAH AND CO Appellant
VERSUS
STATE OF ANDHRA PRADESH Respondents




JUDGEMENT

S.PARVATHA RAO, J. - (1.)THIS tax revision case arises out of the order of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad in T. A No. 1102 of 1987 dated July 2, 1990. The petitioner is a dealer in cotton. Purchases of cotton are taxable under section 6 of the Andhra Pradesh General Sales Tax Act, 1957, read with item No. 8 of Schedule III of the Act and the point of levy at the relevant time (i. e. , 1984-85) was "when purchased by a spinning mill in the State at the point of purchase by the spinning mill and in all other cases at the point of purchase by the last dealer who buys it in the State". During the assessment year 1984-85, the petitioner purchased cotton which he intended to resell, but it was destroyed in a fire accident and the turnover relatable to the damaged cotton was Rs. 1,14,67,488. The authorities below taxed the same on the basis that the petitioner was the last dealer who purchased the same within the State. The Tribunal upheld the assessment made by the sales tax authorities holding that last purchase was the taxable event and that as the cotton was not sold again, the petitioner became the last dealer in the State and therefore was liable to pay the sales tax, and rejected the contention of the petitioner herein that the commodity could not be taxed in its hand as last dealer.
(2.)BEFORE us the learned counsel for the petitioner contends that the cotton was purchased by the petitioner with the intention of selling it away and that though the said intention was frustrated because of its destruction by fire, there was no change in the intention. He submits that unless the cotton was consumed by the petitioner it would not attract the tax. In support of his contention, he sought to rely on an unreported decision of the Division Bench of the Gujarat High Court in Hirji Vithaldas v. State of Gujarat (S. T. R. No. 14 of 1970 decided on 25th June, 1973) referred to in the judgment of a Division Bench of the Bombay High Court in Commissioner of Sales Tax v. East Asiatic Commercial Co. [1985] 59 STC 10. It is stated therein that considering section 12 (1) (c) of the Bombay Sales Tax Act, 1959, the Gujarat High Court came to the conclusion that when the goods were destroyed by fire it was an act beyond the control of the dealer and that in such circumstances it could not he said that the dealer changed his intention in respect of the goods for which he had given an undertaking in the certificate that the goods would be resold within the State, etc. In that case also the cotton purchased by the dealer was destroyed by fire and therefore it could not be resold inspite of the undertaking given by the dealer. The Gujarat High Court observed "that the dealer still intends to sell the goods but he cannot carry out his intention because the goods have been destroyed by fire. So far section 12 (1) (c) is concerned and reading the said section along with section 14, the fact of the intention of the dealer is all important because of the nature of the undertaking given by the licensed dealer". In East Asiatic Commercial Company's case [1985] 59 STC 10, the Bombay High Court did not agree with that view of the Gujarat High Court and observed as follows :
" With all due respect to the Gujarat High Court, we are unable to agree with the interpretation given by the Gujarat High Court to the language of the undertaking given by the licensed dealer. The certificate does not contain any statement relating to the present desires of the licensed dealer. It contains a statement relating to the manner in which the goods are to be utilised in future by the dealer who has given the certificate. There can therefore be no question of the dealer still intending to sell the goods when he is unable to carry out his intention. We would like to point out that once the goods have been destroyed by fire there can be no question of the dealer still intending to resell the goods. The goods have been destroyed. With the destruction of the goods, such intention as the dealer had in connection with the goods has also come to an end. In our view the phrase 'goods are intended for resale' used in section 12 (c) does not refer to any subjective state of mind of the licensed dealer. They refer to the purpose for which the goods are purchased by the licensed dealer. Similarly the words contrary to such certificate' in section 14 (1) of the Bombay Sales Tax Act, 1959, have to be read along with words which follow describing the manner in which a certificate given under section 11 or 12 is contravened, thus inviting the levy of purchase tax. Therefore, in the case of Reference No. 63 of 1979, although the goods have been destroyed by fire and hence cannot be resold on account of circumstances beyond the control of the assessee, section 14 is attracted. "
" Sub-section (1) of section 14 of the Bombay Sales Tax Act, 1959, considered by the Bombay High Court in that case was as follows :
" 14. Liability to purchase tax for contravention of terms of certificated.- (1) Where any dealer or commission agent has purchased any taxable goods under a certificate given by him under section 11 or 12 and contrary to such certificate, the goods are used for another purpose, or are not resold or despatched in the manner and within the period certified, then such dealer or commission agent shall be liable to pay purchase tax on the purchase price of the goods purchased under such certificate; and accordingly he shall include the purchase price thereof, in his turnover of purchases in his return under section 32 which he is to furnish next thereafter. . . . . . . . "

In the present case the question is not whether the petitioner had acted contrary to any undertaking or statement given by him. The question is whether the turnover relating to petitioner's cotton purchases became exigible to tax under section 6 of the Andhra Pradesh General Sales Tax Act. We are of the view that so far as the language of the provisions of the Act applicable to the present case is concerned, there is no question of any intention of the dealer. The taxable event is the purchase by the last dealer who buys in the State. How the purchase by the dealer becomes the last purchase is not relevant. It is not in dispute that as regards the cotton purchased by the petitioner and destroyed by fire in its hands, the petitioner was the last purchaser. That he purchased the cotton intending to again sell the same and that he could not sell the cotton because of the supervening circumstances is not relevant for determining whether the turnover is attracted to tax under section 6 of the Act.

(3.)IN the circumstances, we do not see any error of law in the order of the Appellate Tribunal as regards the taxability of the said turnover of Rs. 1,14,67,488 in question in this tax revision case. The tax revision case is therefore dismissed. Petition dismissed
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