SRI LAKSHMINARAYANA GENERAL TRADERS Vs. COMMERCIAL TAX OFFICER TENALI

JUDGEMENT

(1.) FOR the assessment year 1972-73, the petitioners who are dealers in jaggery, have disclosed in their statements the net turnover liable to sales tax under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter called the Act), before the sales tax authorities at Tenali in the district of Guntur. The dealers claimed exemption of their respective turnovers representing sales of jaggery at the second point in their hands on the ground that it was purchased by them from agriculturists and resident registered dealers. The Commercial Tax Officer, the respondent herein, issued notices proposing to disallow the claim of the petitioners on the ground that they did not furnish any certificate or evidence showing the factum of payment of tax by the dealer, who effected the first sale and requiring the petitioners to submit their objections, if any, within a week. Aggrieved by the impugned notices, the petitioners have preferred these applications under article 226 of the Constitution of India for the issuance of writs of prohibition directing the respondent to forbear from proceeding with the assessments under the Act.

(2.) IN the common counter filed on behalf of the respondent, it is averred that the action of the assessing authority in issuing the impugned show cause notices proposing to levy sales tax on the turnovers of jaggery effected by the petitioners is valid and justified and the petitioners in order to obtain the exemption claimed by them, must prove that their sales are not first sales within the State and that their claim cannot be allowed unless they satisfy the conditions laid down under rule 45 (3) (b) of the Andhra Pradesh General Sales Tax Rules (hereinafter called the Rules) and the mere allegation that they have purchased jaggery from ryots and therefore the sales effected by them are second sales within the State would not entitle them to claim the exemption unless they produce cash memoranda or bills indicating that the ryots have either paid the tax on such sales of jaggery or would pay the tax payable on such transactions by them.

(3.) IN order to appreciate the respective contentions of the parties, it is necessary to refer briefly to the provisions of the Act and the Rules applicable to transactions of sale pertaining to jaggery. Section 5 is the charging section whereunder tax on sales or purchases of goods is levied. Section 5 (1) of the Act read with rules 5 and 6 of the Rules deals with multi-point taxation whereas single point taxation is covered by sub-section (2) of section 5. Section 5 (2) is applicable to transactions of goods indicated in the First Schedule. This sub-section would come into play if the ingredients thereof are satisfied notwithstanding anything contained in sub-section (1) of section 5. Jaggery is shown as item No. 77 of the First Schedule. Hence, the first sale of jaggery within the State alone is taxable. The present rate that governs the first sale of jaggery is 6 paise in a rupee. As jaggery is shown in the First Schedule as item 77, the second or third sales of the same jaggery, which was subjected to sales tax on the first sale, is not liable to sales tax. The dealers in jaggery claimed that they have purchased the jaggery from agriculturists, who had converted sugarcane grown by them into the same and, therefore, the sales of the same jaggery effected by them in their turn to dealers within the State are not exigible to sales tax. The sales tax authorities insisted upon the production of the bills or cash memoranda containing the certificate required under rule 45 (3) (b) regarding payment of tax in respect of first sale of jaggery liable to single point tax within the State and informed the petitioner-dealers that without the production of such data, the sales by them would be treated as first sales within the State making them liable to pay sales tax thereon. It is well-settled that whoever seeks to claim exemption from taxation has to prove that his or her case would fall within the provisions of any section of the Act or any rule made thereunder making such exemption. That apart, section 7-A of the Act throws the burden on the assessee-dealer to prove by independent evidence that any sale transaction which is sought to be taxed is either exempted from tax or not liable to be taxed under the provisions of the Act or the Rules made thereunder.