1960 (3) TMI 30 - HC - VAT and Sales Tax

Summary

Issues: Interpretation of sub-section (vii) of section 5 of the Madras General Sales Tax Act, 1939; Liability of sales tax on subsequent sales of beedies in the Malabar area within the Madras State; Definition of "turnover" under section 2(i) of the Sales Tax Act; Addition of profit percentage to the sale value of beedies.

The judgment of the Kerala High Court in this case involved the interpretation of sub-section (vii) of section 5 of the Madras General Sales Tax Act, 1939. The petitioners, who were assessed to sales tax for the year 1955-56, questioned the liability of sales tax on their subsequent sales of beedies in the Malabar area within the Madras State. The main issue was whether these subsequent sales were liable to tax under section 5(vii). The key contention was whether the sales by the manufacturers to the petitioners constituted the first sales within the State of Madras, making the petitioners' sales the second sales and not taxable. The Court analyzed the sub-section and highlighted three essential ingredients for a sale to be taxed under it: the sale must take place within the State of Madras, be by a dealer not exempted from taxation, and be the first of such sales. The Court referred to a previous case to support its decision that the petitioners' subsequent sales were indeed the first sales liable to tax.

Another issue raised was based on the definition of "turnover" in section 2(i) of the Sales Tax Act. The petitioners argued that if the aggregate of purchases and sales of the manufacturers were considered, they would not have been exempted under section 3(3) due to exceeding the turnover limit of Rs. 10,000. However, the Court dismissed this contention due to lack of evidence supporting that the manufacturers' turnovers exceeded the exemption limit. Additionally, a third point was raised regarding the addition of ten percent profit to the sale value of beedies by the Deputy Commercial Tax Officer. The petitioners claimed this addition was unwarranted and illegal. The Court acknowledged the merit in this argument but held that their powers of revision were limited to cases where the Appellate Tribunal either decided erroneously or failed to decide a legal question. Since the question was not raised before the Tribunal, the Court could not interfere at that stage.

Ultimately, all contentions raised by the petitioners' counsel were dismissed, and the revision petitions were rejected with costs imposed on the petitioners. The Court emphasized that the petitioners' subsequent sales of beedies in the Malabar area within the Madras State were indeed the first sales liable to tax under the relevant provisions of the Madras General Sales Tax Act.