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1967 (6) TMI 40 - HC - VAT and Sales Tax
Issues:
- Claim for deduction of turnover related to accommodation sales - Interpretation of rule 6(c) of the Madras General Sales Tax Rules, 1959 - Determination of whether the transactions constitute accommodation sales Analysis: The case involved the assessees claiming a deduction of a turnover amount as accommodation sales, specifically related to the supply of bread to various government hospitals. The Appellate Assistant Commissioner allowed the deduction, which was confirmed by the Tribunal. However, the State Representative contended before the Tribunal that the supply of bread involved two sales and was not merely accommodation sales. The Tribunal, after considering the facts, held that the transactions fell within the ambit of rule 6(c) of the Madras General Sales Tax Rules, 1959, and rejected the State Representative's contentions. The definition of "turnover" under section 2(r) of the Act excludes accommodation sales, as explained in clause (iv). Rule 6(c) further elaborates on what constitutes an accommodation sale, emphasizing that the goods sold are not from the dealer's stock but obtained from another dealer to accommodate a specific customer, with the sale being immediate and entered into the accounts as an accommodation sale without the accommodating dealer making a profit. In this case, it was established that the assessees supplied bread to hospitals from sister concerns' stocks, fulfilling the conditions of an accommodation sale as per rule 6(c. The court analyzed the elements of an accommodation sale as per rule 6(c) and found that the transactions in question met the criteria. The assessees sourced bread from sister concerns to supply to hospitals immediately, with the intention to accommodate their customers without making a profit. The court emphasized that the statutory provisions did not require accommodation sales to be occasional or the supply from another dealer to be irregular. The intention of the rule-making authority was not to impose such restrictions, as not expressed in rule 6(c) or by the Legislature. In conclusion, the court dismissed the petition, upholding the Tribunal's decision regarding the nature of the transactions as accommodation sales. The assessees' actions were found to align with the requirements of rule 6(c), and the petition was dismissed with costs awarded to the respondent.
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