1975 (8) TMI 107 - HC - VAT and Sales Tax

Issues Involved:
1. Taxability of turnover from the sale of fallen rubber trees, twigs, empty barrels, and scrap.
2. Definition and scope of "dealer" under the Kerala General Sales Tax Act, 1963.
3. Inclusion of sale value of old rubber trees in the taxable turnover.
4. Application of amendments to the Kerala General Sales Tax Act, 1963.
5. Taxability of barrels used for latex sale.
6. Determination of the last purchaser in the state of rubber latex.

Detailed Analysis:

1. Taxability of turnover from the sale of fallen rubber trees, twigs, empty barrels, and scrap:
The revenue contended that the Tribunal erred in exonerating the turnover from tax. The Tribunal's order stated that the turnover represented sale proceeds of fallen rubber trees, twigs, empty barrels, and scrap. It was unclear if the scrap was scrap rubber. If it was, the turnover was assessable as it was a product dealt in by the appellant-company. However, fallen trees, twigs, and empty barrels were unserviceable goods, and their sale did not imply an intention to carry on business in these goods. The Tribunal applied the Supreme Court's dictum in State of Gujarat v. Raipur Manufacturing Co. Ltd., concluding that the turnover was not liable to tax, except for any part related to scrap rubber.

2. Definition and scope of "dealer" under the Kerala General Sales Tax Act, 1963:
The revenue argued that the assessees were "dealers" under section 2(viii) of the Act, as amended definitions broadened the scope. The counsel for the assessee relied on the Supreme Court's decision in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd., which applied the principle from State of Gujarat v. Raipur Manufacturing Co. Ltd. The definition of "business" before and after amendments was examined, noting that the Kerala Act did not include a clause similar to 2(d)(ii) of the Madras Act. The court concluded that the assessees were not "dealers" within the meaning of section 2(viii) of the Act.

3. Inclusion of sale value of old rubber trees in the taxable turnover:
The Tribunal found that the sale value of old rubber trees was not taxable. The company was not a dealer in rubber trees, and the trees were part of the fixed assets. The sales were infrequent and large in volume but did not indicate an intention to carry on the business of selling such trees. The trees were sold only once in their lifetime when they became old and uneconomic. The Tribunal concluded that the company was not carrying on the business of selling trees, and the sales were not part of the business of selling latex and other products.

4. Application of amendments to the Kerala General Sales Tax Act, 1963:
The revenue relied on amendments to the definitions of "business," "casual trader," "dealer," "sale," "turnover," and "total turnover." The court examined these definitions and concluded that the amendments did not change the principle established by the Supreme Court in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. The assessees were not "dealers" within the meaning of section 2(viii) of the Act, and the sales were not transactions of a business nature.

5. Taxability of barrels used for latex sale:
The Tribunal found that the barrels used for selling latex were of substantial value, implying an agreement to sell the barrels as well. The sale of barrels was part of the business transaction of the assessee. The court referred to its decision in A. Srinivasa Pai v. State of Kerala, concluding that the sale of barrels was taxable.

6. Determination of the last purchaser in the state of rubber latex:
In T.R.C. No. 20 of 1974, the petitioner contended that they were not the last purchasers of rubber latex. They produced a letter from M/s. Zaveri & Co., indicating that Zaveri & Co. had purchased rubber and paid tax. The Tribunal had negatived this contention, but the court found that the matter needed further investigation. The order of the Tribunal was set aside, and the case was remitted for determination of whether exemption should be granted based on the letter from M/s. Zaveri & Co.

Conclusion:
The court dismissed T.R.C. Nos. 12, 13, 18, 19, 21, and 22 of 1974, but remitted T.R.C. No. 20 of 1974 for further investigation on the exemption claim. Each party was directed to bear their respective costs.

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