1956 (8) TMI 35 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of the petitioner to pay sales tax under sub-section (2) of section 3 of the Travancore-Cochin General Sales Tax Act, 1125.
2. Determination of whether the sales by the Imperial Tobacco Company of India, Ltd., Coimbatore, to the petitioner are taxable under the Travancore-Cochin General Sales Tax Act, 1125.
3. Interpretation of section 26 of the Travancore-Cochin General Sales Tax Act, 1125, and its impact on the concept of sale under the Act.

Issue-wise Detailed Analysis:

1. Liability of the petitioner to pay sales tax under sub-section (2) of section 3 of the Travancore-Cochin General Sales Tax Act, 1125:

The petitioner, a tobacco licensee, admitted liability to sales tax at the rate of three pies for every Indian rupee on their turnover as directed by sub-section (1) of section 3 of the Travancore-Cochin General Sales Tax Act, 1125. However, the petitioner contended that they were not "the person who in the State is the first dealer in respect of the goods concerned" and thus not liable to pay any tax under sub-section (2) of section 3, read with rule 6 of the Travancore-Cochin General Sales Tax Rules, 1950. The petitioner argued that the first dealer was the Imperial Tobacco Company of India, Ltd., Coimbatore, which supplied the goods to them.

2. Determination of whether the sales by the Imperial Tobacco Company of India, Ltd., Coimbatore, to the petitioner are taxable under the Travancore-Cochin General Sales Tax Act, 1125:

The main question for determination was whether the sales by the Imperial Tobacco Company of India, Ltd., Coimbatore, to the petitioner were taxable under the Travancore-Cochin General Sales Tax Act, 1125. The court examined a letter (Ex. R-16) from the Imperial Tobacco Company of India, Ltd., Coimbatore, which stated that the relationship between the company and its customers was that of a seller and buyer, with delivery specified to be made in Coimbatore. The court found no reason to reject this statement and concluded that the property in the goods passed from the company to the petitioner at Coimbatore. The court also referred to the case of Sheo Prasad v. Dominion of India, which supported the view that the endorsement of railway receipts transferred the property in the goods to the petitioner when the receipts were endorsed in their favor at Coimbatore and posted to their address at Trivandrum.

3. Interpretation of section 26 of the Travancore-Cochin General Sales Tax Act, 1125, and its impact on the concept of sale under the Act:

Section 26, inserted by Ordinance No. IV of 1951 and later replaced by the Travancore-Cochin General Sales Tax (Amendment) Act, 1951, stated that a tax on the sale or purchase of goods shall not be imposed under the Act where such sale or purchase takes place outside the State of Travancore Cochin, in the course of import or export, or in inter-State trade or commerce. The petitioner contended that section 26 modified the concept of sale under the Act, making the transactions between the Imperial Tobacco Company of India, Ltd., Coimbatore, and the petitioner taxable. The court, however, disagreed with this contention, stating that the wording of section 26 did not provide any warrant for concluding that it amplified any provisions of the Act. The court held that section 26 did not render previously non-taxable transactions taxable.

Conclusion:

The court concluded that the sales by the Imperial Tobacco Company of India, Ltd., Coimbatore, to the petitioner were not taxable under the Travancore-Cochin General Sales Tax Act, 1125, as the property in the goods passed at Coimbatore. The petitioner's contention based on section 26 was rejected, and the petition was dismissed with costs. The court did not find it necessary to consider the scope and meaning of the Sales Tax Laws Validation Act, 1956, or the Sales Tax Laws Validation Ordinance, 1956, or the petitioner's contention that previous cases required reconsideration. The petition was dismissed with advocate's fee of Rs. 150.