1977 (4) TMI 153 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of the sum of Rs. 51,000 in the hands of the assessee.
2. Taxability of the turnover amounting to Rs. 16,300 from the sales of electrical goods.

Analysis:

Issue 1: Taxability of the sum of Rs. 51,000
The revision petition under section 38 of the Tamil Nadu General Sales Tax Act challenges the Sales Tax Appellate Tribunal's order regarding the taxability of a sum of Rs. 51,000 from the sale of carding machines and drawing frames by the assessee, a cotton yarn manufacturer. The Tribunal accepted the assessee's claim that the sale was not in the course of business as the goods were assets and were sold when unserviceable. However, the High Court held that since the goods were acquired in the course of business and sold due to being unserviceable, the turnover is taxable under the Act. The Court relied on the definition of "business" under section 2(d) and previous Supreme Court decisions to determine tax liability. The Court emphasized the incidental nature of the sale to the trade, concluding that the turnover was rightly brought to tax.

Issue 2: Taxability of turnover amounting to Rs. 16,300 from sales of electrical goods
The second disputed turnover of Rs. 16,300 represents sales of electrical goods assessed at 9%. The Appellate Assistant Commissioner confirmed the assessment, shifting the burden of proof to the dealer as per section 10 of the Act. The Tribunal, however, held that the assessee was not a dealer in electrical goods and must have purchased them from other dealers, making them second dealers and exempt from tax. The High Court noted that the Tribunal failed to determine whether the goods were purchased locally and if the sales were second-hand. Citing a previous case, the Court emphasized that to claim relief from single point tax, it is essential to show that earlier sales were taxable and tax was payable by the sellers. As the Tribunal did not address these crucial aspects, the matter was remanded back for a fresh consideration, allowing the tax revision case.

In conclusion, the High Court upheld the taxability of the sum of Rs. 51,000 from the sale of carding machines and drawing frames, while remanding the issue of the Rs. 16,300 turnover from the sales of electrical goods back to the Tribunal for further examination.