1974 (8) TMI 85 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 6 of the Karnataka Sales Tax Act, 1957 regarding the levy of tax on purchase turnover of paddy.
2. Determination of whether the purchase turnover of firewood is taxable under section 6 of the Act.

Analysis:

The High Court of Karnataka heard sales tax revision petitions concerning the order of the Karnataka Sales Tax Appellate Tribunal. The dispute involved the assessment of the total and taxable turnover of the assessee, which included purchases of paddy and firewood. The Tribunal held that the purchase turnover of paddy is taxable but excluded the turnover related to firewood. The key issues for determination were whether the purchase turnover of paddy and firewood should be subject to tax under section 6 of the Act.

Regarding the purchase turnover of paddy, the Court analyzed the provisions of section 6, which impose a tax on the purchase price of goods under certain circumstances. The Court examined the definition of a "dealer" under the Act and emphasized that if the seller exclusively sells agricultural produce grown on land cultivated by them personally, they are not deemed as dealers. The Court highlighted the need for a thorough investigation to determine whether the sellers of paddy were indeed dealers as per the Act, as this would impact the tax liability at the purchase point.

In the context of firewood purchase turnover, the Court disagreed with the Tribunal's view that firewood was not consumed in the manufacture of beaten rice. Citing a Supreme Court decision, the Court clarified that goods purchased and used in the manufacturing process are liable to tax. Therefore, the Court held that the purchase turnover related to firewood should be taxable under the Act.

Since the assessing authority and appellate authorities did not provide findings on whether the sellers were considered dealers under the Act, the Court decided to remit the matter for fresh investigation and assessment. The Court allowed the revision petitions and directed the assessing authority to conduct a new assessment in accordance with the Court's order. The parties were instructed to bear their own costs, and the judgment was ordered accordingly.