1957 (2) TMI 51 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the assessment order and its communication.
2. Taxability of kerosene tins under the Madhya Bharat Sales Tax Act.
3. Exhaustion of alternative remedies by the petitioner.
4. Interpretation of the term "turnover" under the Act.
5. Applicability of exemption on kerosene to its containers.

Detailed Analysis:

1. Validity of the Assessment Order and its Communication:
The petitioner argued that the assessment order dated 29th March 1956 was not properly communicated to them. The Sales Tax Department claimed the notice was affixed to the petitioner's premises on 31st March 1956. The court noted that the petitioner did not challenge the timing of the order within the three-year period allowed under section 10 of the Act. The court concluded that the assessment order must be communicated to the assessee within the prescribed period for it to be considered complete.

2. Taxability of Kerosene Tins:
The petitioner contended that the sale of kerosene, an exempt commodity, should not include the tins as taxable items. The court examined whether the tins, being containers, were subject to sales tax. It was determined that the tins were sold separately from the kerosene, as evidenced by the price difference between bulk kerosene and kerosene sold in tins. The court concluded that the tins were indeed taxable as separate items from the exempt kerosene.

3. Exhaustion of Alternative Remedies:
The department raised a preliminary objection, arguing that the petitioner had not exhausted alternative remedies under the Act, such as filing an appeal or revision. The court referenced the Supreme Court decision in Himmatlal Harilal Mehta v. State of Madhya Pradesh, which allowed the petitioner to bring the matter directly to the High Court without exhausting alternative remedies due to the burden of depositing the tax for an appeal.

4. Interpretation of the Term "Turnover":
The court analyzed the definition of "turnover" under clause (q) of section 2 of the Act. The petitioner argued that the words "for the payment received in respect of a contract" should qualify both "sold" and "supplied." The department contended that these words only qualified "supplied." The court concluded that the words "either" and "or" indicated two separate circumstances: outright sale of goods and supply of goods towards a contract. Thus, the phrase "for the payment received in respect of a contract" only applied to "supplied" and not "sold."

5. Applicability of Exemption on Kerosene to its Containers:
The court examined whether the exemption on kerosene extended to its containers. It was determined that the exemption could not be stretched to cover the containers. The court referenced several cases, including Varasuki and Co. v. The Province of Madras and Mohanlal Jogani Rice and Atta Mills v. The State of Assam, which established that containers sold for a price were taxable. The court concluded that since the tins were sold for a price, they were subject to sales tax, and the exemption on kerosene did not apply to the tins.

Conclusion:
The court dismissed the petition, concluding that the assessment order was validly communicated, the tins were taxable, the petitioner did not need to exhaust alternative remedies, the term "turnover" was correctly interpreted, and the exemption on kerosene did not extend to its containers. The costs were to be borne as incurred due to the department's initial oversight in not charging the tax and delayed communication.