1967 (5) TMI 62 - SC - VAT and Sales Tax

The turnover of Rs. 3,80,918 should, under the law, be deemed to relate to the quantity of gold which the assessee had purchased from other dealers and it was exempt from tax as turnover representing second sales of bullion - Appeal allowed.

Summary

Issues:
Interpretation of tax liability under the Madras General Sales Tax Act, 1959 for French coffee sales turnover.

Analysis:
The judgment addressed the assessment of tax liability for French coffee sales turnover under the Madras General Sales Tax Act, 1959. The appellant, a dealer in various commodities including coffee powder, contested the assessment by the Commercial Tax Officer, arguing that he was not the last purchaser in the State and should not be taxed on the turnover related to French coffee sales. The Appellate Assistant Commissioner remanded the matter for a fresh assessment, leading to an appeal to the Sales Tax Appellate Tribunal. The Tribunal, citing a previous decision, ruled in favor of the assessee, prompting the State of Madras to file a revision petition which was dismissed by the High Court.

The court examined the relevant provisions of the Act, specifically Section 3(2) and items 31, 32, and 33 of the First Schedule. Section 3(2) outlined the tax payable by a dealer on the turnover of specified goods, while items 31, 32, and 33 detailed the taxation points for Chicory, Coffee, and French coffee, respectively. The burden of proving tax liability exemption rested on the dealer as per Section 10, and dealers were required to maintain accurate accounts as per Section 40 and Rule 26 of the Madras General Sales Tax Rules, 1959.

In a previous case, the High Court had ruled on a similar issue of tax liability for bullion sales, emphasizing the importance of maintaining separate accounts to prevent tax evasion. The court noted that the previous decision required reconsideration in light of the statutory provisions of the Madras General Sales Tax Act, 1959. It was deemed necessary to set aside the High Court's judgment and remand the case for a fresh determination. The court highlighted the lack of clarity in the Appellate Tribunal's order regarding the taxability of French coffee under item 33 and directed a rehearing of the appeal in accordance with the law.

Ultimately, the court allowed the appeal, setting aside the previous orders and remanding the case to the Sales Tax Appellate Tribunal for a fresh hearing. The appellant was directed to bear the costs of the appeal.