1967 (10) TMI 61 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of turnover relating to bus body-building contracts
2. Taxability of sales of aluminium scrap
3. Imposition of penalty for failure to disclose turnover in the return

Analysis:
1. Taxability of turnover relating to bus body-building contracts:
The primary issue in these tax cases is whether the turnover from bus body-building contracts is subject to tax. The Tribunal, concurring with the department, held that it is taxable. The contention of the assessee was that the contracts only involved construction work and not the sale of bus bodies as finished units. However, the High Court disagreed, emphasizing that the intention of the parties must be analyzed based on the contract terms. The crucial test is the passing of property, and in this case, the stipulation of payment against delivery indicates that property passes only upon the delivery of the bus body. This signifies a sale of goods, leading to the conclusion that the turnover is rightly chargeable to sales tax.

2. Taxability of sales of aluminium scrap:
In Tax Case No. 257 of 1966, an additional issue arose regarding the taxability of sales of aluminium scrap. Both the department and the Tribunal deemed it taxable. However, the assessee argued that they are not dealers in aluminium scrap, and it is merely a by-product of their bus body-building business. The High Court accepted this argument, noting that the company's objective does not involve trading in aluminium scrap, and it is generated incidentally during their primary business activity. Citing relevant precedents, the Court directed the exclusion of turnover related to sales of aluminium scrap from the taxable turnover.

3. Imposition of penalty for failure to disclose turnover:
The final aspect pertains to the imposition of penalties in Tax Cases Nos. 257 and 258 of 1966 for the failure to disclose the turnovers of aluminium scrap and bus body-building contracts in the return. The Tribunal upheld the penalties, albeit reducing the amount, citing the non-inclusion of these turnovers in the return. However, the High Court opined that the penalties under section 12(3) are applicable only in specific circumstances, such as deliberate suppression of turnover. Since the turnovers were present in the accounts and not deliberately concealed, the Court allowed the revision in favor of the assessee, thereby nullifying the penalties and excluding the turnover of sales of aluminium scrap from taxation.

In conclusion, the High Court upheld the taxability of turnover from bus body-building contracts, excluded the sales of aluminium scrap from taxation, and dismissed the penalties imposed for failure to disclose turnovers in the return. The judgments were allowed in part, with no costs imposed.