1965 (6) TMI 7 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of sections 8(2) and 9(1) of the Central Sales Tax Act in relation to the Madras General Sales Tax Act.
2. Assessment of sales tax on transactions involving cotton purchases and sales.
3. Application of Supreme Court judgments in State of Mysore v. Lakshminarasimhiah Setty and Sons and Mariappa Nadar v. State of Madras.
4. Determination of the turnover liable to tax under the Central Sales Tax Act.

Detailed Analysis:

1. The case involves an appeal against the order of the Board of Revenue under section 34 of the Madras General Sales Tax Act, 1959, regarding the assessment of sales tax on a dealer in cotton. The appellant contested the refixing of turnover by the Board, arguing that the sales in question did not attract tax at the point of last purchase in the State. The interpretation of sections 8(2) and 9(1) of the Central Sales Tax Act was crucial in determining the tax liability of the transactions.

2. The nature of transactions, where the appellant purchased cotton from out-of-State dealers and consigned it to ultimate buyers in the State, was scrutinized. The Board considered these transactions as sales within the meaning of section 3(b) of the Central Sales Tax Act, leading to the assessment of tax on the refixed turnover. The controversy revolved around whether the consignments were made on railway receipts in the name of ultimate buyers, and the transfer of these receipts to the buyers by the appellant.

3. The judgment referred to previous decisions, including Mariappa Nadar v. State of Madras and State of Mysore v. Lakshminarasimhiah Setty and Sons. The interpretation of the phrase "in the same manner" in section 9(3) of the Central Act was discussed, highlighting the differing views on the assimilation of provisions of State enactments in the levy of tax under the Central Sales Tax Act. The Supreme Court's interpretation of sections 8(2) and 9(1) was pivotal in determining the taxability of the turnover.

4. The Court analyzed the Supreme Court's view on the imposition and levy of tax under the Central Act, emphasizing that the last purchase of cotton in the State should be taxable. The applicability of section 5-C(2) of the Madras Act was also considered in light of the interpretation of section 9(1) of the Central Act. Ultimately, based on the interpretation of relevant provisions and the nature of transactions, the Court held that the turnover in dispute was not liable to tax under section 6 of the Central Act.

In conclusion, the Court allowed the petition, following the Supreme Court's interpretation of sections 8(2) and 9(1) of the Central Sales Tax Act, and held that the turnover involving the contested sales was not subject to tax under the Central Act.