1976 (3) TMI 227 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of turnover from sales of iron scraps.
2. Includibility of sales returns and bonus discounts in taxable turnover.
3. Right of the State to file an appeal under Section 36 of the Madras General Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Taxability of Turnover from Sales of Iron Scraps:
The assessing authority initially rejected the assessee's claim regarding the turnover from sales of iron scraps for the assessment years 1965-66 and 1966-67. The Appellate Assistant Commissioner (AAC) ruled that the assessee was not a dealer in iron scraps and that the sales of iron scraps were not part of their business, thus excluding this turnover from the taxable turnover. However, the Tribunal upheld the AAC's decision, dismissing the department's enhancement petition. The High Court, referencing the Supreme Court's decision in State of Tamil Nadu v. Burmah Shell Co. Ltd., held that despite the assessee not being a dealer in iron scraps, the turnover from iron scraps was taxable due to the amended definition of "business" in Section 2(d) of the Madras General Sales Tax Act, 1959. Consequently, the Tribunal's rejection of the enhancement petition was overturned, and the turnover from iron scraps was directed to be included in the taxable turnover.

2. Includibility of Sales Returns and Bonus Discounts in Taxable Turnover:
The AAC rejected the assessee's claim regarding the includibility of sales returns and bonus discounts in the taxable turnover. The Tribunal confirmed the AAC's decision, and the assessee's appeal on this matter was dismissed. The High Court did not provide further analysis on this issue, as the primary focus was on the turnover from iron scraps and the procedural aspects of the State's appeal.

3. Right of the State to File an Appeal under Section 36:
The assessee contended that the State should have filed an appeal under Section 36 instead of an enhancement petition. The High Court examined the provisions of the Madras General Sales Tax Act, 1959, and concluded that Section 36 did not provide the State with the right to file an appeal. The term "any person" in Section 36 was interpreted to include only the assessee or persons subject to penalties under Sections 22(2), 23, 27, and 42, and not the State. The Court emphasized that the power of enhancement under Section 36(3) was inconsistent with a right of appeal for the revenue. The Court also noted that the State's right to revision was provided under Sections 32 and 34, and the State could seek review or take the matter to the High Court if the assessment order was considered by the Tribunal. The High Court upheld the maintainability of the revenue's enhancement petition and allowed the revision petitions, setting aside the Tribunal's order and including the turnover from iron scraps in the taxable turnover.

Conclusion:
The High Court allowed the revision petitions, set aside the Tribunal's order, and directed the inclusion of the turnover from iron scraps in the taxable turnover. The petitions were allowed with costs awarded to the petitioners, and the counsels' fee was set at Rs. 150 in each case.