1958 (9) TMI 66 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether Co-operative Milk Supply Societies and Unions are exempt from payment of sales tax.
2. Interpretation of Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act (Act LII of 1952).
3. Validity and impact of Government Orders on sales tax exemption for Co-operative Milk Supply Societies and Unions.

Analysis:
1. The primary issue in this Tax Revision Case was whether Co-operative Milk Supply Societies and Unions are exempt from paying sales tax. The Tadapalligudem Co-operative Milk Supply Society Ltd. contested the tax levy imposed on the sale of milk for the charging year 1954-55, claiming exemption under the Essential Goods Act and a Government Order. The petitioner relied on clause 3 of the Schedule under Act LII of 1952, which includes fresh milk and milk products but excludes sweetmeats.

2. The Court analyzed the provisions of Act LII of 1952, specifically section 3, which states that any State law imposing a tax on goods declared essential shall not have effect without the President's assent. The Court concluded that the Madras General Sales Tax Act, under which the tax was levied, predates Act LII of 1952 and is unaffected by it. Therefore, the assessment of sales tax on the Co-operative Milk Supply Society was deemed valid under existing legislation.

3. Regarding the Government Orders, the Court examined two orders: G.O. Ms. No. 2333, Revenue, dated 7th September 1951, and G.O. No. 2790, Revenue, dated 24th September 1953. The first order exempted Co-operative Milk Supply Societies and Unions from sales tax for three years from their formation, while the second order withdrew the exemption for sales to actual consumers. The Court held that the second order superseded the first, limiting the exemption to sales to institutions and not consumers.

In conclusion, the Court dismissed the Tax Revision Case, upholding the sales tax assessment on the Co-operative Milk Supply Society. The judgment clarified the applicability of the Essential Goods Act and the impact of Government Orders on sales tax exemptions for such societies, emphasizing the withdrawal of exemption for sales to consumers in the subsequent order.