1970 (11) TMI 75 - HC - VAT and Sales Tax

Summary

Issues:
- Inclusion of sales of poultry feed in gross turnover for sales tax assessment.
- Interpretation of previous judgment regarding sales tax liability of poultry feed.
- Analysis of constituents of poultry feed sold by petitioner-firm.
- Failure of petitioner-firm to appeal assessment order.
- Declaration of poultry feed as tax-free goods in Schedule B.

Interpretation of Previous Judgment:
The petitioner-firm, engaged in selling poultry feed, contested the inclusion of poultry feed sales in the gross turnover for sales tax assessment. The firm relied on a previous judgment by a Division Bench which held that Murghi dana, prepared from broken wheat, is not liable to sales tax. However, the Assessing Authority distinguished this judgment, stating that the poultry feed sold by the petitioner-firm was a distinct commodity, comprising proteins, salts, minerals, vitamins, and antibiotics, besides wheat refractions. The Authority found that wheat constituted only 7% of the poultry feed, indicating the use of other materials in its preparation. The court emphasized that the petitioner should have appealed the assessment order to challenge the tax liability based on the constituents of the poultry feed.

Failure to Appeal Assessment Order:
The petitioner-firm did not appeal the assessment order, citing the requirement to deposit the assessed sales tax before filing an appeal. However, during the hearing, the firm's counsel mentioned that appeals were indeed filed, and penalties were waived. The court noted that the petitioner should have pursued further remedies by appealing to higher authorities to determine the applicability of tax exemptions under Schedule B of the Act. The court highlighted the importance of following the proper appellate and revisionary procedures to address tax disputes effectively.

Declaration of Poultry Feed as Tax-Free Goods:
In 1965, poultry feed was declared tax-free goods by inserting item 71 in Schedule B of the Act. This entry specified the contents of poultry feed, such as proteins, minerals, etc., indicating that poultry feed is distinct from tax-free foodgrains. The court clarified that the exemption of foodgrains from tax does not automatically extend to products, like poultry feed, containing those foodgrains. Consequently, the court found no merit in the writ petition and dismissed it without costs.

This judgment underscores the significance of analyzing the composition of goods to determine their tax liability, the importance of following proper appeal procedures in tax disputes, and the distinction between tax-free goods and products containing tax-free components.