1975 (9) TMI 147 - SC - VAT and Sales Tax

Whether meat on hoof is taxable under the Punjab General Sales Tax Act, 1948? Held that - Appeal allowed. It is difficult to appreciate the view taken by the learned single Judge which has been affirmed by the Division Bench that meat on hoof is preserved meat, the preservation being the natural carton consisting of the skin of the animal . The skin covering the flesh of the animal preserves its life; to think that the skin is a carton for the flesh, which can be used for food after the animal is slaughtered, in our opinion, goes against commonsense. The question can be answered only on a proper appreciation of the terms of the agreement between the appellants and the army authorities, the case must go back to the High Court for disposal of the matter according to law on a consideration of the relevant contract; the appellants will file copy of the contract, supported by an affidavit, before the hearing of the matter in the High Court.

Summary

Issues:
1. Taxability of "meat on hoof" under the Punjab General Sales Tax Act, 1948.

Analysis:
The Supreme Court of India addressed the issue of whether "meat on hoof" is taxable under the Punjab General Sales Tax Act, 1948. The case involved a firm of army contractors registered under the Act and the Central Sales Tax Act, supplying meat and meat on hoof to the army. Initially, the sale of meat to the army, whether in dressed form or as meat on hoof, was not taxed. However, the Joint Excise and Taxation Commissioner later sought to reopen the assessment, claiming that "meat on hoof" was taxable as live sheep and goats, not falling under the tax exemption for meat, fish, and eggs. The appellants argued that what was sold under the contract was meat, not live animals.

The High Court dismissed the writ petition challenging the tax assessment, leading to an appeal before the Supreme Court. The appellants contended that "meat on hoof" referred to the meat content of the animals, not live animals, based on the pricing structure in the contract. The single Judge of the High Court held that "meat on hoof" was not exempt from sales tax under the Act, considering it as preserved meat in its natural carton, the animal's skin. The Division Bench upheld this finding.

However, the Supreme Court disagreed with this interpretation, finding it illogical to consider the skin of the animal as a carton for the flesh. The Court noted that the contract terms between the appellants and the army authorities were crucial in determining whether "meat on hoof" meant live animals or meat content. As the contract was not fully presented in the proceedings, the Court remitted the case back to the High Court for a detailed review based on the complete contract terms. The Court emphasized the importance of understanding the agreement between the parties to resolve the taxability issue accurately.

Ultimately, the Supreme Court allowed the appeal, setting aside the judgments of the single Judge and Division Bench, and instructed a reevaluation of the case based on a comprehensive examination of the contract terms. The Court directed the appellants to submit a copy of the contract with an affidavit for the High Court's consideration. No costs were awarded in the matter.