1967 (3) TMI 85 - HC - VAT and Sales Tax

Summary

Issues: Interpretation of exemption under section 8(1) of the Mysore Sales Tax Act for charcoal and firewood supplied to Government hospitals.

Analysis:
1. The petitioner, a hospital contractor, supplied charcoal and firewood to Government hospitals in Mangalore during 1961-62 and claimed exemption from sales tax under section 8(1) of the Act read with entry 29 of the Fifth Schedule. The Assessing Officer, Deputy Commissioner of Commercial Taxes, and Sales Tax Appellate Tribunal rejected the claim, leading to this revision petition challenging the legal correctness of the authorities' view.

2. The crucial issue revolved around whether the charcoal and firewood supplied were used for domestic purposes, as per entry 29 of the Fifth Schedule. It was established that the petitioner supplied these items for boiling water, food preparation, or laundry in the hospitals, indicating a specific use for domestic activities.

3. The interpretation of entry 29, which mentions "Firewood or charcoal when sold for domestic use," was central to the case's outcome. The authorities and Tribunal contended that domestic use implied usage within a house or home, adding a location-based condition to the exemption criteria.

4. The petitioner argued that such an interpretation by the authorities was an addition to the entry's conditions, rather than a mere interpretation. The focus should be on the nature of use rather than the specific location where the items are utilized.

5. The Court emphasized that the essence lies in the nature of use, not the premises where the items are used. Reference was made to a precedent where the House of Lords clarified that the character of the purpose for which an item is supplied, not the premises, determines if it qualifies as domestic use.

6. The Court rejected the restrictive interpretation by the authorities and Tribunal, asserting that the word "domestic" in the entry does not necessitate a specific location for use. The purpose of the exemption was to facilitate services or comforts commonly provided in people's homes, irrespective of the exact place of use.

7. By analyzing the complete phrase "sold for domestic use," the Court concluded that the purpose or object of the sale was for domestic purposes, indicating that the items would be used for activities typically carried out in homes.

8. Consequently, the Court allowed the revision petition, setting aside the orders of the Tribunal and departmental authorities that taxed the petitioner's turnover related to charcoal and firewood. The tax collected on this turnover was ordered to be refunded, and no costs were imposed on the petitioner.