1956 (4) TMI 53 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Commercial Tax Officer to revise the assessment.
2. Liability of certain turnovers to sales tax under Article 286(2) of the Constitution.
3. Classification and taxability of different types of sales transactions.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commercial Tax Officer to Revise the Assessment:
The primary issue was whether the Commercial Tax Officer had the jurisdiction to revise the assessment made by the Deputy Commercial Tax Officer. The assessee contended that the Commercial Tax Officer's revisional authority did not extend to an inspection of material not considered by the Deputy Commercial Tax Officer. The court held that the Commercial Tax Officer had undoubted jurisdiction to examine whether the Deputy Commercial Tax Officer's view was correct. The term 'record' included not merely the assessment order but the entire assessment file. Therefore, the Commercial Tax Officer was within his jurisdiction to call upon the assessee to produce the original books and other records to support the entries in the account books.

2. Liability of Certain Turnovers to Sales Tax under Article 286(2) of the Constitution:
The court examined whether certain turnovers were liable to sales tax under Article 286(2) of the Constitution, which pertains to inter-State trade. The Tribunal had held that about 12.5 lakhs alone fell within the scope of Article 286(2), while the balance was on sales completed by delivery within the State to agents of buyers residing outside the State. The court agreed with the Tribunal's finding that these sales were not in the course of inter-State trade. The court rejected the contention that delivery within the State for immediate transport outside the State constituted inter-State trade, citing its earlier decision in The Indian Coffee Board case.

3. Classification and Taxability of Different Types of Sales Transactions:
The turnover in dispute was categorized under four heads:
- Item 1 (Rs. 1,43,072-4-0): Value of motor cars delivered ex-factory to the dealer's drivers, temporarily registered under the dealer's name.
- Item 2 (Rs. 28,01,357-6-9): Value of cars delivered to the dealer's drivers without temporary registration, driven away under trade number plates.
- Item 3 (Rs. 7,866-5-0): Value of spare parts or accessories delivered along with the cars.
- Item 4 (Rs. 15,000): Value of spare parts consigned to dealers, delivered outside the State by rail or steamer.

The court held that items 1 to 3 were taxable as the delivery was effected within the State of Madras, and subsequent transport by the buyer did not alter the intra-State nature of the sale. However, item 4 was excluded from the assessable turnover as it constituted inter-State trade under Article 286(2) due to the delivery being an integral part of the sale transaction.

Conclusion:
The court concluded that the Commercial Tax Officer acted within his jurisdiction in revising the assessment. The sales to dealers, where delivery was completed within the State of Madras, did not fall within the scope of inter-State trade under Article 286(2) of the Constitution. The turnover of Rs. 15,000 for spare parts delivered outside the State was excluded from the assessable turnover. The order of the Tribunal was modified accordingly, and the petitioner was directed to pay the costs of the respondent.