1963 (5) TMI 47 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability to pay sales tax on disputed turnover of cloth and tailoring charges.
2. Determination of turnover by Deputy Commercial Tax Officer.
3. Appeal to Appellate Assistant Commissioner of Commercial Taxes.
4. Appeal to Sales Tax Appellate Tribunal.
5. Interpretation of transaction as sale of garments or separate sale of cloth and tailoring charges.
6. Application of tests from previous case law to ascertain nature of transaction.
7. Analysis of separate bills for cloth sale and work charges.
8. Comparison with precedent case regarding sales tax liability on labor charges.

The High Court of Madras considered the issue of the assessee's liability to pay sales tax on a disputed turnover of cloth and tailoring charges. The Deputy Commercial Tax Officer determined the net turnover to be Rs. 2,10,979.59, subjecting it to tax at 1%. The Appellate Assistant Commissioner of Commercial Taxes adjusted the turnover to Rs. 77,685.08, including hosiery goods and tailoring charges. The Sales Tax Appellate Tribunal found the transaction to be the sale of ready-made garments and directed tax payment. However, the Court disagreed, stating that the transaction involved separate sale of cloth and work labor. Referring to a previous case, the Court applied tests to determine the nature of the transaction, concluding it fell under a category where the customer purchases material and orders tailoring. The Court noted the issuance of separate bills for cloth sale and work charges, exempted from sales tax, leading to the assessee not being liable for tax on the disputed turnover. The Court set aside the Tribunal's order, allowing the revision with costs.