IMPORTANT POINT
The object of Section 6-A(ii)(a) of the A.P. General Sales Tax Act is to levy purchase tax on goods consumed either for the purpose of manufacture of other goods for sale or consumed otherwise.

Headnote:Andhra Pradesh General Sales Tax Act, 1957-Section 6A-Purchase tax-Liability of builders of houses and flats to pay tax on material like sand, bricks and granites purchased by them-Object of Section 6A(ii)(a) is to levy purchase tax on goods consumed either for purpose of manufacture of other goods for sale or consumed otherwise- When goods cease to exist in original form or cease to be available in the State for sale or purchase, purchasing dealer of such goods is liable to tax if seller is or cannot be taxed-Builder who are engaged in building houses and flats who purchase materials such as sand, bricks granite etc. for construction of building fall within scope of Section 6A.
Held : We are concerned in this case only with clause (a) of sub-section (ii) of Section 6-A, that is, either consumption of such goods in the manufacture of other goods for sale or otherwise. Clause (ii) of Section 6-A of the Act postulates levy of tax on purchase of goods from a person other than a registered dealer for consumption or disposal or despatch of goods outside the State. So the scheme of clause (ii) of Section 6-A of the Act is that when the goods cease to exist in the original form or cease to be available in the State for sale or purchase, the purchasing dealer of such goods is liable to tax if the seller is not or cannot be taxed. To our mind, it appears that the object of Section 6-A(ii)(a) of the A.P. General Sales Tax Act is to levy purchase tax on goods consumed either for the purpose of manufacture of other goods for sale or consumed otherwise. If the view in Pio Food Packers (supra) is accepted the result would be that the expression "otherwise" will qualify the expression "sale" and not the expression "manufacture", which appears to us to be erroneous on a plain construction of the provision. The intention of the legislature, it appears to us, is to bring to purchase tax in either even of consumption of goods in the manufacture of goods for sale or consumption of goods in any other manner. Once the goods are utilised in the construction of buildings the goods cease to exist or cease to be available in that form for sale or purchase so as to attract the tax and, therefore, the correct meaning to be attributed to the said provision would be that tax will be attracted when such goods are consumed in the manufacture of other goods or are consumed otherwise. (Para 10).

JUDGMENT

Rajendra Babu, J.-The respondents are engaged in building of flats and houses for which purpose they buy materials such as sand, bricks and granite from persons other than registered dealers. These items have not suffered any sales tax.

2. The Assistant Commissioner of Commercial Taxes, Enforcement, called upon the respondents by a notice dated January 19, 1982 to appear before him with their accounts relating to purchase of raw materials effected by them commencing from April 1, 1977. The respondents sent a reply to him stating that they do not trade in any goods; that they construct and sell flats; that they are not registered dealers; that said purchases do not attract tax under Section 6-A of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as the Act ). Not being satisfied with the reply filed by the respondents, the Assistant Commissioner of Commercial Taxes issued a notice on March 22, 1982 under Section 28 of the Act calling upon the respondents to produce books of accounts and purchase bills and to file the details relating to the purchase of raw materials effected by them for the period commencing from April 1, 1977. Aggrieved by the said notice the respondents filed writ petitions under Article 226 of the Constitution of India questioning the jurisdiction of the appellants to assess them under the Act.

3. Several contentions had been raised before the High Court such as discrimination between registered and unregistered dealers and that the respondents are not dealers and that in order to attract Section 6-A a dealer must have purchased goods from unregistered dealers and consumed such goods in the manufacture of other goods for sale or disposed of such goods either within or outside the State. The first two contentions stood rejected and that part of the order is not challenged before us. Therefore, we have to confine ourselves to the question whether the respondents who purchased goods from persons other than registered dealers fall within the scope of Section 6-A of the Act.

Section 6-A of the Act reads as follows:-

"6-A. Levy of tax on turnover relating to purchase of certain goods : Every dealers, who in the course of business-

(i) purchases any goods (the sale of purchase of which is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under Section 5 or under Section 6, as the case may be, or

(ii) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a person other than a registered dealer, and

(a) either consumes such goods in the manufacture of other goods for sale or otherwise, or

(b) disposes of such goods in any manner other than by way of sale in the State, or

(c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commence, shall pay tax on the turnover relating to purchase aforesaid at the same rate at which but for the existence of the aforementioned circumstances, the tax would have been leviable on such goods under Section 5 or Section 6."

4. The respondents contention is that the goods such as sand and bricks purchased by them are not consumed in the manufacture of other goods for sale inasmuch as they deal in the construction of flats which are in the nature of immovable property. The respondents are also not manufacturing any other goods for sale or any other purposes. Thus, they contend that Section 6-A of the Act is not attracted. The contention put forth on behalf of the appellants is that even goods consumed for building purposes otherwise than in the manufacture of other goods are also covered by clause (ii)(a) of Section 6-A. The High Court found that there is a conflict between the decisions in Ganesh Prasad Dixit v. Commissioner of Sales Tax, Madhya Pradesh1 and Deputy Commissioner, Sales Tax (Law) Board of Revenue (T

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Judicial Analysis

SupremeToday

1999 Supreme(SC) 1086

IMPORTANT POINTThe object of Section 6-A(ii)(a) of the A.P. General Sales Tax Act is to levy purchase tax on goods consumed either for the purpose of manufacture of other goods for sale or consumed otherwise.

Cases Referred (4)

Judicial Analysis

IMPORTANT POINT
The object of Section 6-A(ii)(a) of the A.P. General Sales Tax Act is to levy purchase tax on goods consumed either for the purpose of manufacture of other goods for sale or consumed otherwise.