1962 (6) TMI 43 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Determination of the price of the fertilizer mixture.
2. Nature of the transaction (sale vs. works contract).
3. Entitlement to exemption or deduction of the value of groundnut oil-cake.
4. Consideration of the transaction as a sale under the Andhra Pradesh General Sales Tax Act.
5. Claim of discount by the assessee.

Detailed Analysis:

1. Determination of the Price of the Fertilizer Mixture:
The primary issue was whether the price of the fertilizer mixture was Rs. 308-98 nP. or Rs. 122-50 nP. per ton. The assessing authority and the Tribunal concluded that the price was an all-inclusive Rs. 308-98 nP. per ton. The assessee claimed that the price should be Rs. 122-50 nP. per ton after deducting the value of the groundnut oil-cake supplied by the sugar factory. The court found that the price of Rs. 308-98 nP. per ton was inclusive of all ingredients and manufacturing charges, and the deduction for the groundnut oil-cake was merely a rebate.

2. Nature of the Transaction (Sale vs. Works Contract):
The assessee contended that the transactions were in the nature of a works contract and not a sale. The Tribunal, however, concluded that the contract was for the sale of the fertilizer mixture as a finished product. The court agreed, noting that the contract involved the sale of a completed chattel (the fertilizer mixture) and not merely a contract for work and labor. The court cited relevant case law to distinguish between a sale and a works contract, emphasizing that the supply of one ingredient (groundnut oil-cake) by the sugar factory did not alter the nature of the transaction as a sale.

3. Entitlement to Exemption or Deduction of the Value of Groundnut Oil-Cake:
The assessee claimed exemption from turnover for the value of the groundnut oil-cake supplied by the sugar factory. The court rejected this claim, stating that the turnover should be calculated based on the total price of the fertilizer mixture (Rs. 308-98 nP. per ton) as set out in the bills. The court noted that the value of the groundnut oil-cake was credited to the sugar factory's account and debited to the raw material account of the assessee, indicating that it was treated as a purchase, not a bailment.

4. Consideration of the Transaction as a Sale under the Andhra Pradesh General Sales Tax Act:
The court examined the definitions of "sale" and "turnover" under Sections 2(n) and 2(s) of the Andhra Pradesh General Sales Tax Act. It concluded that the consideration for the sale of the fertilizer mixture included both cash and the value of the groundnut oil-cake. The turnover was deemed to be the total amount set out in the bill of sale, which was Rs. 308-98 nP. per ton. The court emphasized that the deduction of the value of the groundnut oil-cake did not alter the total amount of the turnover.

5. Claim of Discount by the Assessee:
The assessee argued that the value of the groundnut oil-cake should be considered a discount. The court rejected this argument, referring to Rule 6(1) of the Andhra Pradesh General Sales Tax Rules, which defines "discount" as a deduction from the amount due or the price of goods. The court noted that the exemption claimed for the groundnut oil-cake did not qualify as a discount under this definition.

Conclusion:
The court upheld the order of the Tribunal, concluding that the price of the fertilizer mixture was Rs. 308-98 nP. per ton, inclusive of all ingredients and manufacturing charges. The transaction was deemed a sale, not a works contract, and the value of the groundnut oil-cake supplied by the sugar factory could not be exempted or deducted from the turnover. The claim for discount was also rejected. The revision case was dismissed with costs.