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1977 (10) TMI 99 - HC - VAT and Sales Tax
Issues: Taxability of turnover under Tamil Nadu General Sales Tax Act for alleged sales by an association to its members in the course of import.
Analysis: The judgment of the Madras High Court addressed the issue of taxability of a turnover of alleged sales by an association to its members in the course of import under the Tamil Nadu General Sales Tax Act. The revenue contended that the turnover represented local sales, while the assessee argued that the sales were in the course of import. The association acted as interveners for its members, who paid amounts specifying the motor parts required. The agreements between the association, its members, and the State Trading Corporation were crucial in determining the nature of the transactions. The association was authorized to import on behalf of the members, but the import license was granted to the State Trading Corporation. The terms of the agreements emphasized that the goods imported belonged to the State Trading Corporation. The Court highlighted that the import sale was in favor of the State Trading Corporation, with the association acting as its agent. The association was strictly prohibited from making sales to its members, who were not actual users of the goods. The agreements between the association and its members, read in conjunction with the terms of the license and agreements with the State Trading Corporation, indicated that the association's role was limited to distribution or allotment without any intention to sell to its members. The Court emphasized that any sales to members would have to be by the members themselves, in accordance with the terms specified. The judgment distinguished a previous case and upheld the Tribunal's view that the turnover was not taxable. The Court concluded that there were no sales by the association to its members, resulting in no taxable turnover. Consequently, the petitions filed by the revenue were dismissed, and the parties were directed to bear their respective costs.
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