TMI Blog1959 (9) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 3(1) shall be levied in accordance with the following provisions: (a) in the case of all cotton (including kapas) sold to a spinning mill in the State, the tax shall be levied from the spinning mill on the amount for which it is bought by it." The Tribunal, agreeing with the Department, held that the assessee's purchases of cotton, which had been imported from abroad, which amounted to Rs. 34,61,213-1-9 were liable to be taxed. It was the correctness of that decision which the assessee challenged before us in its application preferred under section 12-B of the Act. The nature of the transactions was thus summed up by the Tribunal: "The import of cotton from Egypt is made by certain dealers in Bombay and the shipping documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t its purchases were in the course of import and that they were therefore protected from any levy of tax by Article 286(1)(b) of the Constitution; (2) alternatively, they were purchases in the course of inter-State commerce, which Madras could not tax as the delivery of the goods purchased was effected outside the State of Madras; and (3) rule 4-A (iv) of the Turnover and Assessment Rules was ultra vires, and, in the absence of a valid prescription of a single point for the levy of tax on sales and purchases of cotton required by section 5(ii) of the Act, an assessee could not be subjected to any tax liability. These contentions which were rejected by the Tribunal have been pressed again before us. On the findings of the Tribunal it seems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of buyer and seller, both being principals, and the sale was only after the import of the goods, even where the contract to sell preceded the order to the exporter abroad to ship the goods in India. It was the seller's agent at Cochin that cleared the goods imported, and it was that agent that consigned the goods by rail to the assessee, and the assessee's contractual obligation was normally to pay for the cotton against delivery of the railway receipt at Tirupur. We agree with the Tribunal that these purchases of the imported cotton effected by the assessee did not fall within the scope of Article 286(1)(b) of the Constitution. They were not purchases in the course of import, but they were purchases effected after the import had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inter-State commerce. We have to consider next the plea of the assessee, that rule 4-A (iv) was invalid and unenforceable. The contention was that as the rule stood it contravened the requirements of section 5(ii) of the Act, which required the prescription by rule to give effect to the statutory requirement of a single point for the levy of tax on transactions in cotton. Learned counsel submitted that, while section 5(ii) required a single point to be prescribed in the series of sales, rule 4-A(iv) prescribed that the purchaser shall be taxed. The second objection to the validity of the rule was that with the rule as it stood it did not really provide for a single point, and that a multi-point levy was still possible under the rule. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Madras to another spinning mill would attract a liability to tax, even though the first spinning mill, which figures as the seller in the subsequent transactions, had already been taxed under rule 4-A(iv). It should be remembered that despite the monthly returns to be submitted the turnover to be taxed under the Act is the annual turnover. If in the hypothetical case suggested by the learned counsel for the assessee a spinning mill bought yarn in the first instance for spinning, but subsequently sold that yarn without spinning, on our interpretation of rule 4-A(iv), that spinning mill would not be bound to disclose the purchases of yarn, because what is taxable is the purchase of yarn by a spinning mill for spinning. In that respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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