1977 (4) TMI 152 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of sale of miscellaneous items of empties and discarded materials.
2. Taxability of turnover related to supplies of castings used as parts of mould board plough.
3. Interpretation of a notification granting exemption on the sales of agricultural implements.

Analysis:
1. The first issue pertains to the taxability of a sum of Rs. 859.27 representing the sale of miscellaneous items of empties and discarded materials acquired by the assessee. The Sales Tax Appellate Tribunal held that even transactions incidental or ancillary to the business are taxable under the explanation to section 2(d) of the Tamil Nadu General Sales Tax Act. Relying on a Supreme Court decision, the Tribunal upheld the tax addition, stating that the assessee's claim that the sale was not in the course of business was not valid. The High Court concurred with the Tribunal's decision, emphasizing that the test of whether the assessee is carrying on business in the particular items is no longer relevant under the statute.

2. The second issue concerns the taxability of turnovers amounting to Rs. 28,451 and Rs. 29,553.10 for two assessment years, related to supplies of castings used as parts of mould board plough. The assessee contended that these turnovers were exempt from tax based on a notification under section 17 of the Act. The sales tax authorities and the Tribunal rejected this claim, asserting that the castings did not fall within the exemption for sales of agricultural implements. However, the High Court disagreed, holding that parts of tools or instruments also qualify as implements under the notification. Referring to a letter from the Commissioner of Commercial Taxes, the Court concluded that the exemption applied to parts of agricultural implements, thereby allowing the assessee's claim and overturning the Tribunal's decision.

3. Additionally, a specific contention was raised regarding the assessment year 1970-71, where the assessing authority issued a notice without explicitly referring to the provision for revising assessments. The counsel argued that such notice did not confer the authority with the power to revise the completed assessment. However, the Court found this contention lacking merit, stating that the authority had the power to revise assessments under section 16 of the Act, even if the notice did not explicitly mention it. Consequently, the Court partly allowed one tax revision case and fully allowed another, granting costs to the petitioner.

In conclusion, the High Court upheld the taxability of transactions incidental to business, clarified the scope of exemption for sales of agricultural implements, and affirmed the authority's power to revise assessments under the relevant statutory provisions.