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1972 Supreme(AP) 68
Andhra Pradesh High Court
Judges : GOPALRAO EKBOLE, K.A.MUKTADAR
Vajhala Venkata Ramana - Appellant
Versus
State OF A.P. - Respondent
Decided On : 04-18-72
The Government is carrying on business in selling forest timber and the first sale is made by the Government when it auctions the forest timber.
Headnote:
SALES TAX - Levy - First sale - Forest timber - Government auctioning forest timber - Whether Government carrying on business - Whether first sale taxable - Andhra Pradesh General Sales Tax Act (6 of 1957), Ss. 2(bbb), 2(e), 2(h), 2(n), 5(1), 5(2)(A), First Schedule, Entries 63, 64.
Fact of the Case:
The petitioner, a partner in a firm that purchased forest timber from the Forest Department, challenged the assessment order levying sales tax on the firm's sale of the timber. The petitioner contended that the first sale was made by the Government when it auctioned the forest timber and that, therefore, no sales tax could be levied on the firm's subsequent sale of the timber.
Finding of the Court:
The court held that the Government was carrying on business in selling forest timber and that the first sale was made by the Government when it auctioned the forest timber. Therefore, no sales tax could be levied on the firm's subsequent sale of the timber.
Issues: 1. Whether the Government was carrying on business in selling forest timber. 2. Whether the first sale was made by the Government when it auctioned the forest timber.
Ratio Decidendi: 1. The definition of "business" in the Andhra Pradesh General Sales Tax Act (6 of 1957) includes any trade, commerce, or manufacture carried on irrespective of the motive to make gain or profit. 2. The Government, by regularly and frequently auctioning forest timber, was carrying on business in selling forest timber.
Final Decision: The court allowed the writ petition and quashed the impugned assessment order by the issue of a writ of Certiorari. The demand notice issued in pursuance of the said assessment order was also quashed.
( 2 ) IN view of the apparently conflicting pronoucnements I think it necessary to have this case posted before a division bench which may, if necessry, consider the need for reference to a Full Benchi in pursuance of the order of the High Court dated 17-1-1972 this Writ Peiuon coming on for final hearing yesterday and this day and the writ and rule nisi directed by order of the High Court dated 8-8-70 and made hertin and the record submitted in pursuance there of and the counter affidavit and reply affidavit filed herein and upon hearing the aigumtnts of Mr. K. B. Krishna Murtby, Advocate for the Petioner and of the 5th Government Pleader on behalf of the Respondents.
( 3 ) MESSRS. lirumala Timber Depot did business in timber at gokavaram. 1 he him submitted in A-) return a net turn-over for the year 1966-69 on 29-4-1909. The managing partner reported that the business had been stopped with effect from 31-3-1969 A show cause notice was issued proposing best judgment assessment on the turnover of Rs. 2,07,000. The notice was also served on all the partners of the firm. One of the lartrers, K- Vet kataramaiah, appeared before the assessing authority on 25-2-1970. He however stated that he has no account books and expressed his inability to produce the sameo y. Narasimha Rao appeared on 2-3-1970. It is in his name that the auction was confirmed. He was also not in a position to produce the \account books. Another set of notices were also issued to the partners. Since no one took interest the Assessing authority to the best of its judgment reached the conclusion that the assessee firm had purchased the rights in the forest coupe for Rs, 60. 000/ -. They were assessed accordingly and a tax amounting to Rs. 3,600/- was directed to be levied.
( 4 ) THE turn-over related to a forest coupe. The Writ petitioner is a partner of the firm, Tirumala Timber Depot, Rampachodavaram. The petitioner alleges that Y. Narasimharao who had originally purchased the forest coupe for timber from the Forest Department, was a partner of the firm, Tirumala Timberdepot. The auction therefore was thus taken by Y. Narasimha Rao for and on behalf of the firm There were 12 partners in the firm according to the deed of partnership dated 4-4-1968.
( 5 ) THE petitioner contended that the partnership firm is the first purchaser and since sales tax was levied on the first sale, it is the Government from whom the sales tax has to be collected and not from the firm on the ground that the firm is selling timber to third parties. The writ petitioner therefore has applied under Article 226 of the Constitution for the issue of a writ of Certiorari to quash the assessment order dated 31-3-1970 as well as the demand notice issued against the petitioner dated 10-8-1970.
( 6 ) THE petition is resisted by the respondents. It is not however denied that Y. Narasimha Rao was the auction-purchaser. He purchased the forest coupe for the firm. It is howtver contended that the firm has already been provided with reasonable opportunity to produce the books and since it failed to do so, the assessing authority had to have recourse to an assessment by best of Judgment. That assess. ment order has become final and in pursuance of that order a notice of demand has been served upon the petitioner. An Appeal ought to have been preferred, against the assessment order, which has not been preferred. It was therefore submitted that the High Court in such circumstances should not interfere in the process of collection of tax due from the petitioner. It was submitted that although sales tax is leviable at the point of first sale, since the tax cannot be collected from the government whatever sales the firm conducted in favour of third parties, that wou
