1973 (4) TMI 86 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the sum claimed as sales discount is liable to be deducted from the taxable turnover.
2. Whether the turnover of canteen sales is taxable under the Tamil Nadu General Sales Tax Act.

Analysis:

Issue 1:
The first item in dispute is a sum claimed as a sales discount by the assessee for the assessment year 1964-65. The Tribunal accepted the claim for exemption based on clause (iii) of explanation (2) to section 2(r) of the Tamil Nadu General Sales Tax Act. The revenue contested this view, arguing that the discount given at the end of the month, not at the time of sale, does not qualify for exemption. The court analyzed the relevant statutory provisions and ruled that any cash or other discount on the price allowed in respect of any sale, as per the regular practice of the dealer, should not be included in the turnover. The court emphasized that the discount need not be given at the time of sale, and the statutory provisions cover discounts based on the aggregate sale price during a specific period. The court referred to a similar provision in the U.P. Sales Tax Act and agreed with the interpretation that discounts can be in cash or kind, and the motive behind the discount is immaterial. The court dismissed the revenue's argument and upheld the Tribunal's decision regarding the first item.

Issue 2:
The second item in dispute pertains to canteen sales. The court referred to a recent Supreme Court decision that clarified the taxability of canteen sales post an amendment to the definition of "business." Before the amendment, canteen sales were not taxable as they were not considered sales in the course of business or for profit. However, post-amendment, canteen sales fall under the definition of "sale" and are taxable irrespective of the profit element. The Tribunal had granted exemption for the entire turnover of canteen sales, but the court held that post the amendment, canteen sales after 1st September 1964 are taxable. The court remitted the matter to the Tribunal to reevaluate the petitioner's liability for sales tax on canteen sales after the specified date in line with the Supreme Court's decision. The court partially allowed the petition, directing a fresh consideration of the canteen sales turnover post the amendment.

In conclusion, the court upheld the exemption for the first item claimed as a sales discount but directed a reassessment of the tax liability on canteen sales post the relevant amendment.