1971 (3) TMI 93 - HC - VAT and Sales Tax

Summary

Issues:
Assessment orders for the years 1960-61 to 1965-66 under the Tamil Nadu General Sales Tax Act; Whether the turnover in relation to sales of coconuts grown by a lessee can be characterized as assessable turnover under section 2(r) of the Act.

Analysis:
The petitioner, an agriculturist engaging in activities such as obtaining coconut topes on lease, was assessed by the respondent for the years 1960-61 to 1965-66. The petitioner did not register as a dealer under the Tamil Nadu General Sales Tax Act, and the assessing authority discovered lease deeds indicating the petitioner's dealings in coconuts. The petitioner argued that the sales of coconuts grown by him should be excluded from assessable turnover under section 2(r) of the Act, despite not having any interest in the land. The petitioner contended that his transactions with the owners enabled him to grow the agricultural produce within the meaning of the Act. However, the court found that the petitioner did not physically or notionally grow the produce himself, as he was merely a lessee of the topes without any ownership or tenancy rights over the land.

The court analyzed the definition of "turnover" under section 2(r) of the Act, which includes the aggregate amount for goods bought or sold by a dealer. The proviso excludes proceeds from the sale of agricultural produce grown within the State by the person himself or on land in which he has an interest. The court emphasized that the petitioner's lack of interest in the land prevented the exclusion of turnover under the proviso. The court highlighted the necessity for the growth of produce by the person himself, which was not established in the petitioner's case, as he did not physically exert himself for the growth of coconuts in the topes.

Referring to previous judgments, the court held that the petitioner's exclusive right to the usufructs did not constitute an 'interest in land,' as required for exclusion under the Act. The court reiterated that a substantial interest in the land is essential to exclude proceeds from the sale of agricultural produce from assessable turnover. Since the petitioner failed to demonstrate personal growth of the produce or substantial interest in the land, the court upheld the assessment orders for all years in question and dismissed the writ petitions without costs.

In conclusion, the court found no errors in the assessment orders, stating that the turnover in question was not excludable under section 2(r) of the Act. The penalty imposed was deemed consequential, and there were no jurisdictional errors in the impugned order. Consequently, the writ petitions were dismissed.