1964 (8) TMI 65 - HC - VAT and Sales Tax

Summary

Issues:
1. Exclusion of certain sales from taxable turnover for assessment years 1958-59 and 1959-60.
2. Determination of whether the sales of articles by the assessee were properly excluded.
3. Interpretation of the term "dealer" and "sale" under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:
The High Court of Andhra Pradesh heard two revision petitions filed by the State against the orders of the Appellate Tribunal excluding certain sales of commodities by a company from the taxable turnover for the assessment years 1958-59 and 1959-60. The company, a works contractor and registered dealer, sold surplus materials like cement bags, casurina poles, and iron scrap left over from construction projects. The Appellate Tribunal excluded these sales, prompting the State to file the revisions. The main issue was whether these sales should be considered taxable under the Andhra Pradesh General Sales Tax Act, 1957.

The Court examined whether the company, as a works contractor, was a "dealer" engaged in the business of buying and selling the surplus materials. The definition of "sale" and "dealer" under the Act was crucial in determining the taxability of these transactions. The Court considered the company's primary business of construction and the regularity of these sales as a subsidiary aspect of their main operations. It referenced previous cases to establish that the sales were connected to the nature of the company's business and intended to be part of their business activities.

In analyzing the contentions raised, the Court referred to precedents such as Gannon Dunkerley and Company (Madras) Private Limited v. The Government of Madras and A. Ebrahim and Company v. The State of Bombay to determine the criteria for including sales in the taxable turnover. The tests applied were whether the sales were related to the dealer's business nature and not solely for profit-making. The Court rejected arguments that there was no profit motive behind the sales, emphasizing that the intention to engage in the business activity was the key factor.

While the petitioner cited a Supreme Court decision in State of Madras v. Gannon Dunkerley & Co., (Madras) Ltd., the Court found more relevance in the interpretations provided by previous judgments. Ultimately, the Court concluded that the sales in question were connected to the company's business activities and should be included in the taxable turnover. As a result, the revisions were allowed, and the company was liable for the tax on these sales. The Court also awarded an advocate's consolidated fee of Rs. 150.