STATE OF TAMIL NADU Vs. RAICHAEL CHACKO

JUDGEMENT

(1.) These two tax revision cases filed by the State arise out of the common order of the Sales Tax Appellate Tribunal allowing the assessee's appeal and dismissing the enhancement petition filed by the State.

(2.) The assessment year in question is 1978-79 and the turnover in dispute in these tax cases relates to certain purchases of rubber from two persons, Thompson and Jacob. According to the assessee, the purchases made from these two persons are not the first purchases in this State and therefore, the assessee is not liable to pay the purchase tax on her purchase of rubber. This claim of the assessee for exemption on the ground that the turnover represents second purchases of rubber inside the State, was rejected by the assessing authority on the ground that the two persons. Thompson and Jacob, are merely bill traders who lend their names without actually handling the goods and therefore, the assessee should be taken to be the first purchasers of rubber in this State. Aggrieved by the order of the assessing authority, the assessee went before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner also held that the said turnover relating to purchase of rubber from the two persons, Thompson and Jacob, cannot be taken to be second purchases. The appellate authority, however, sustained the addition made by the assessing authority to the returned turnover to an ad hoc addition of Rs. 5, 000. Against the order of the Appellate Assistant Commissioner, the assessee filed an appeal before the Tribunal questioning the order of the Appellate Assistant Commissioner sustaining the assessment on the purchases made from the two persons, Thompson and Jacob. As regards the deletion of certain addition made by the assessing authority, the State filed an enhancement petition before the Tribunal. The Tribunal allowed the assessees' appeal holding that the purchases made by the assessee from the two persons, Thompson and Jacob, are second purchases and therefore, the sale of rubber being taxable only on first sale, the assessee who is not the first purchaser cannot be made liable to pay the tax. The Tribunal also held that the ad hoc addition made by the Appellate Assistant Commissioner cannot be legality sustained.The substantial question before us is whether the Tribunal is right in holding that the sales to the assessee being second sales are not taxable in the assessee's hand. In this case, the Tribunal has specifically found that the said two persons, Thompson and Jacob, were registered dealers on the books of the Sales Tax Department and their registration certificates Nos. were R.C. 521021 and R.C. 521145 respectively. They have registered themselves as dealers in rubber before the Rubber Board and their Rubber Board licenses and registration certificates were also in force. The sale bills issued by the said two persons to the assessee contained Rubber Board licence number, registration certificate number, quantity, rate and the amount and also a certificate to the effect that the goods have already suffered tax in this State at the stage of the first sale. Before the Tribunal, the Revision did not deny the fact that the two dealers, Thompson and Jacob, were in existence and they were registered dealers and the only contention of the Revenue was that the said dealers have purchased rubber from unknown sources. The Tribunal felt that the fact that those two dealers have purchased rubber from unknown sources is not quite relevant for, they have certified that the goods have suffered tax at the first sale and the sale to the assessee was a second sale. It is not doubt true that the Revenue want to label them as bill traders, but on the materials on record which have been referred to above, the Tribunal held that the two persons, Thompson and Jacob, have been shown to be the dealers from whom the assessee has purchased rubber and the said two dealers are the first purchasers of rubber. We are of the view that the Tribunal has come to the right conclusion in this case. So long as the assessee's purchases are second purchases from a person or persons who were then registered dealers, the assessee cannot be made liable to tax under section 3(2) of the Act. Once there has been an earlier purchase inside the State, it is for the Revenue to proceed against the first purchaser and merely because the first purchaser has not paid the tax, they cannot proceed against the second purchaser when the statute admittedly exempts the second sales from tax.The learned Government Pleader has brought to our notice an earlier order of the Tribunal in M.T.A. No. 444 of 1982 dated 18th February, 1983 in which Jacob was found to be a bill trader.

(3.) But the fact that Jacob was found to be a bill trader for the year 1980-81 by the Tribunal will not automatically indicate that Jacob was a bill trader in the year 1978-79 with which we are concerned in these cases. A dealer may be a bill trader in one year and he may be an actual dealer of the same goods in another year. As a matter of fact, a perusal of the decision of the Tribunal in M.T.A. No. 444 of 1982 indicates that Jacob's registration certificate stood cancelled in the year 1980-81 and it is because of the cancellation of the registration certificate he was not in a position to actually deal with the goods and he was only acting as a bill trader. Indeed for the assessment year 1978-79 there is no such evidence and it has been specifically found even by the Appellate Assistant Commissioner that the registration certificates of both Thompson and Jacob have not been cancelled and that they were in fact licensed to deal in rubber by the Rubber and they have also registered themselves in the Rubber Board as dealers. On the materials on record available for the year 1978-79, it is not possible to hold that either Thompson or Jacob was a bill trader and they did not actually deal in rubber. In this view of the matter, we are not in a position to interfere with the orders of the Tribunal. The tax revision cases are, therefore, dismissed.