1967 (8) TMI 102 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of turnover related to the sale of rubber chappals under the General Sales Tax Act, 1125.

Detailed Analysis:

1. Common Question in Tax Revision Cases:
- Two tax revision cases raised a common question and were heard together.

2. Assessment of Turnover:
- Registered dealers conducting trade in rubber footwear were assessed to tax for the turnover from the sale of rubber chappals.

3. Legal Provisions:
- Under section 5(vii) of the General Sales Tax Act, 1125, the sale of rubber products is liable to tax at the point of first sale in the State by a dealer not exempt from taxation.

4. Contention of Petitioners:
- Petitioners argued that the chappals sold by them were the same rubber products already taxed at the point of first sale of component parts.

5. Assessing Authorities' View:
- Authorities held that the chappals had a distinct commercial identity from the component parts, making them subject to tax as first sales in the State.

6. Petitioners' Argument:
- Petitioners contended that assembling component parts into chappals did not change the identity of the rubber products, thus should not be taxed as first sales.

7. Case Law Comparison:
- Comparison to U.S. Supreme Court decision on product identity was made, but it did not directly support petitioners' case.

8. Legal Precedents:
- Rulings on different commodities after processing were cited, emphasizing the commercial identity and use of the final product.

9. Supreme Court Rulings:
- Supreme Court rulings on the identity of processed goods were discussed to determine the taxability of the chappals.

10. Commercial Identity Test:
- Applying the test of commercial identity, it was found that chappals had a distinct identity from the component parts.

11. Consumer Understanding:
- Considering how consumers perceive footwear, it was concluded that chappals have a unique identity separate from the sole and strap.

12. Separate Commercial Identity:
- The straps and soles were found to have distinct commercial identities, exempting them from taxation when sold separately.

13. Conclusion:
- The turnover did not represent sales of the same commodities purchased as component parts, leading to the assessment of tax on the first sales of chappals.

14. Dismissal of Revision Petitions:
- The revision petitions were dismissed with costs, upholding the assessment of tax on the turnover from the sale of rubber chappals.