1964 (7) TMI 23 - HC - VAT and Sales Tax

Summary

Issues:
1. Classification of sandalwood oil for sales tax purposes under the Madras General Sales Tax Act, 1959.

The judgment of the Madras High Court addressed the issue of whether sandalwood oil falls under the classification of goods for sales tax purposes as specified in the Madras General Sales Tax Act, 1959. The appellant, a manufacturer of sandalwood oil, had a significant turnover in sandalwood oil, with export sales and sales within the state. The assessing authority levied tax at 6% treating it as falling under the category of "scents and perfumes, powders, snows, and scented hair oils." The Sales Tax Appellate Tribunal had a majority opinion that sandalwood oil was a perfume falling under the specified category. However, a dissenting opinion argued it should be classified differently. The Court analyzed the definition of "perfume" and the nature of sandalwood oil, concluding that sandalwood oil, in its sold form, did not fit the criteria of being a perfume ready for use without further processing. The Court also considered the intention behind the sales of sandalwood oil, including its use in preparing perfumes and pharmaceutical purposes. It referred to legal precedents to support the argument that the classification should align with the actual use and sale of the product. Ultimately, the Court allowed the petition, directing the assessing authority to revise the assessment based on the findings that sandalwood oil should be classified as a vegetable oil under a specific category in the Sales Tax Act.