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2014 (11) TMI 245 - HC - VAT and Sales TaxLevy of 16 per cent tax on the sale of deep freezers - Held that:- Tribunal, the last fact-finding authority, in our opinion, has misconceived the principles underlying the virtue of brevity. In annexure C order it merely says that since the appellant purchased deep freezer from exempted class of dealers and no tax was paid, the assessment levying 16 per cent tax on its sale is in accordance with law. The Tribunals would do well to examine the facts of the transaction and relate it to the law applicable, being the last fact-finding authority, so as to give a clearer picture. In the absence of such examination, we have thoroughly examined the assessment order as such. The entire controversy revolves around the sale of deep freezers and the levy of 16 per cent on turnover of ₹ 5,15,860. Admittedly on first sale of deep freezers no tax was payable since the sale was by SSI units, eligible for exemption. The discussion above would show that if the assessee purchased it for sale, then the subsequent sale if to another registered dealer for sale, then the liability to tax on such sale would be 12 per cent and any subsequent sale which is the last sale would be leviable at four per cent. However, if the assessee's sale is to a registered dealer not for sale or to an unregistered dealer, then necessarily the assessee's liability would be 16 per cent. If the assessee has purchased it as capital goods and effecting sale of used freezers, whatever be the period of use, then tax would be payable only on the amount of such sale as indicated above. The contention that the assessee leases out the deep freezers and since the definition of "sale" includes a lease cannot hold good. The transfer of right to use resulting from a transaction of lease is taxable at the rate of eight per cent under sub-clause (iii) of sub-section (1) of section 5 of the Act. Assessment order also does not give us a complete picture. The action of the assessing officer in adding gross profit and the submission of the assessee that they are intermediary dealers within the State would make the transactions fall either under the first limb of the proviso or the second limb of the proviso; depending upon "to whom" the sale is effected. However, we also find from the reconciliation statement of the assessee extracted in page 5 of the assessment order that depreciation has been claimed on deep freezers and loss of sales on fixed assets had been deducted to the profit and loss account. This reveals an improper marshalling of facts by all the authorities concerned. Whether the assessee is an intermediary seller and if so whether the sale is to a registered dealer for sale or otherwise has essentially to be determined before the rate of tax leviable is decided. In such circumstances, the sale price of the assessee would be relevant for determination of the turnover on which the rate of tax is to be applied. There is no room for deducting depreciation or loss because then it is a sale of goods and not sale of fixed assets. However, if the assessee is making second hand sales of deep freezers, then again what is taxable is the consideration for such sale and there can be no addition of gross profit to the purchase turnover. We are afraid that the authorities below have not examined the facts in the proper perspective - Matter remanded back - Decided in favour of Assessee.
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