1961 (9) TMI 58 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Inclusion of the value of opening stock in the sales turnover.
2. Exemption of sales through Gordon Woodroffe and Co. as export sales.
3. Exemption of sales through Dharamsee Parpia as export sales.

Detailed Analysis:

1. Inclusion of the Value of Opening Stock in the Sales Turnover:
The petitioner, a licensed dealer and tanner, contended that the value of the opening stock of raw hides and skins at the commencement of the year 1955-56, which was purchased during 1954-55, should not be included in the sales turnover of tanned hides and skins for 1955-56. The Court examined the relevant statutory provisions and rules, particularly Rule 16 of the Turnover and Assessment Rules as it stood before and after the amendment on 1st April 1955. The Court noted that the petitioner's purchase turnover of untanned hides and skins did not suffer tax either during 1955-56 or in 1954-55. The Court held that the petitioner could not have been subjected to assessment under the old Rule 16(2) as the purchases were from unlicensed dealers, and thus, the petitioner could not claim the benefit of the proviso to Rule 16(2) of the amended rule. The Court concluded that there was no warrant for exemption of the purchase value of the opening stock in computing the sales turnover of tanned hides and skins for 1955-56.

2. Exemption of Sales through Gordon Woodroffe and Co. as Export Sales:
The petitioner argued that the sale of tanned hides and skins through Gordon Woodroffe and Co. for Rs. 74,266-0-9 was a sale in the course of export and thus exempt from taxation under Article 286 of the Constitution. The Court analyzed the terms of the contract and the evidence provided, including the testimony of the manager of Gordon Woodroffe and Co. It was established that the property in the goods passed only beyond the customs frontier and not before. The advance received by the petitioner was treated as a loan, and the goods consigned constituted security for the loan. The Court held that the transaction was one in the course of export and thus exempt from sales tax.

3. Exemption of Sales through Dharamsee Parpia as Export Sales:
The petitioner contended that the sale of tanned hides and skins through Dharamsee Parpia for Rs. 4,268-10-6 was an export sale in favor of Sriven Bros. (Eastern) Ltd., London, and not exigible to tax. The Court examined the nature of the transaction and found that Dharamsee Parpia acted as the agent of Sriven Bros. (Eastern) Ltd. The contract was a direct export sale between the foreign buyer and the petitioner, acting through its representative Kovai Tanned Leather Co. The Court held that the transaction was an export sale and thus exempt from sales tax.

Conclusion:
The Court concluded that the inclusion of the value of the opening stock in the sales turnover for 1955-56 was justified and not exempt from taxation. However, the sales through Gordon Woodroffe and Co. and Dharamsee Parpia were deemed to be in the course of export and thus exempt from sales tax. The revision petition was partly allowed, with no order as to costs.