1998 (2) TMI 553 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the legality and validity of the assessment order under the Assam Purchase Tax Act, 1967 for the quarterly period ending June 30, 1993.
Dispute over the assessment of tax on paddy purchased but remaining unmilled in the stock of the petitioner-company.
Revisional order against the assessment also contested.

Analysis:

1. The petitioner challenged the assessment order dated February 7, 1994, assessing tax on paddy purchased but unmilled in their stock, arguing that it did not acquire the character of the last purchase. The revisional order against the assessment was also challenged.

2. The assessment demanded an additional amount of Rs. 16,706, comprising tax and interest, in addition to the tax already paid by the petitioner.

3. The petitioner, a private company engaged in rice milling, contended that tax on paddy was payable until June 30, 1993, under the Assam Purchase Tax Act, which was repealed on July 1, 1993, with the introduction of the Assam General Sales Tax Act exempting paddy from tax.

4. The assessing authority insisted on taxing all purchases of paddy, including unmilled stock, until June 1993, citing revenue loss if not assessed. The petitioner argued that only milled paddy should be taxed as the last purchase, relying on legal precedents like State of Madras v. T. Narayanaswami Naidu.

5. The assessing authority's approach was deemed incorrect as the Act required tax at the point of last purchase, which had not been established for the unmilled paddy. The burden of proof was on the dealer, which the petitioner had discharged by disclosing the unmilled paddy in their return.

6. Referring to Deputy Commissioner of Sales Tax v. Padinjarakara Agencies, the court emphasized that tax liability arises only when purchases acquire the quality of the last purchase, supporting the petitioner's argument.

7. Consequently, the court allowed the writ application, quashing the assessment and revisional orders, and directed a fresh assessment in accordance with the law, highlighting the importance of determining the point of last purchase for tax liability.

This detailed analysis covers the legal arguments, statutory provisions, and precedents cited in the judgment, providing a comprehensive understanding of the issues involved and the court's decision.