1972 (8) TMI 122 - HC - VAT and Sales Tax

Summary

Issues: Disputed turnover regarding the purchase of cotton in the course of import; Interpretation of the Madras General Sales Tax Act, 1959; Application of precedents set by the Supreme Court and High Court in similar cases.

The judgment delivered by the Madras High Court in this case revolved around the disputed turnover of a sum of Rs. 1,60,031.16, representing the value of cotton purchased by the assessee from Messrs. Volkart Brothers. The assessing authority initially rejected the contention that the purchase was in the course of import, but the Appellate Assistant Commissioner supported the assessee's claim. However, the Board of Revenue, utilizing its power under section 34 of the Madras General Sales Tax Act, set aside the Appellate Assistant Commissioner's decision and reinstated the assessing authority's order. The central issue was whether the Board of Revenue's view that the purchase was not in the course of import was correct.

The facts established by the lower authorities were undisputed: the assessee obtained an import license for a specific type of cotton from the United States and Africa, explicitly stating that the imported goods were for its own use in its mills. The assessee authorized Messrs. Volkart Brothers to import the cotton on its behalf. The import was carried out by Messrs. Volkart Brothers, who then sold the cotton to the assessee. The assessee argued that since the cotton was imported on its license and could not be sold to others by the importer, the sale was indeed in the course of import. The assessee's counsel cited relevant Supreme Court and High Court decisions to support this position.

The Board of Revenue attempted to distinguish the present case from the Supreme Court decision by highlighting specific factors that, in their view, were absent in this case. However, the High Court disagreed with this distinction, emphasizing that the facts of this case aligned with the Supreme Court's ruling. The High Court clarified that the critical factor in determining a sale in the course of import was the specific import for the use of the purchaser, restricting the importer from diverting the goods to other parties. The High Court found that the present case fell within the ambit of the Supreme Court's decision and a previous High Court ruling.

Ultimately, the High Court concluded that the Board of Revenue's decision could not be supported. The tax case was allowed with costs, and the Board of Revenue's order was overturned. The counsel's fee was set at Rs. 150, and the petition was allowed.