1978 (3) TMI 193 - HC - VAT and Sales Tax

Summary

Issues:
Assessment to sales tax under the Central Sales Tax Act, 1956 for the assessment years 1963-64 to 1969-70. Whether the assessee is exempt from the liability to pay sales tax as a grower or producer of rubber engaged in agricultural operations.

Analysis:
The tax revision cases involved the assessment to sales tax under the Central Sales Tax Act, 1956 for the years 1963-64 to 1969-70 by the assessee, Rajagiri Rubber Co. Ltd. The assessee claimed exemption from sales tax as a grower or producer of rubber engaged in agricultural operations. The Sales Tax Officer considered the assessee a "dealer" based on various factors, including registration as a dealer, collection of Central sales tax, and the profit-motive evident from the nature of the cash crop. However, the Appellate Assistant Commissioner disagreed, finding that the assessee was not a dealer but a pure agriculturist selling rubber as agricultural produce. The Tribunal's decision was unsatisfactory as it did not adequately address the factors considered by the lower authorities. The Tribunal's remand order was criticized for not specifically considering these aspects, leading to a non-application of judicial mind. The High Court set aside the Tribunal's order and remanded the case for fresh disposal in accordance with law.

The key issue revolved around whether the assessee could be considered a "dealer" under the Central Sales Tax Act, thus liable to pay sales tax on rubber sales. The Sales Tax Officer's inference was based on the assessee's registration, collection of sales tax, and profit-motive, while the Appellate Assistant Commissioner found the assessee to be a pure agriculturist engaged in selling agricultural produce. The Tribunal's decision, although acknowledging the business activities of the assessee, failed to address the crucial elements like the regularity, frequency, and volume of sales necessary to establish the assessee as a dealer. The High Court criticized the Tribunal's remand order for lacking a specific consideration of these aspects, leading to a non-application of judicial mind.

The Supreme Court's decision in Dharmodayam Company's case was referenced, emphasizing that the mere enumeration of business objects in a company's memorandum does not imply the actual conduct of all specified activities. The Appellate Assistant Commissioner's finding that the assessee was solely engaged in cultivation and sale of rubber as agricultural produce was considered a clear factual determination. The High Court's decision to set aside the Tribunal's order and remand the case for fresh disposal aimed to ensure a comprehensive consideration of all relevant aspects in determining the assessee's status as a dealer under the Central Sales Tax Act.