1978 (11) TMI 135 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of rule 9(b) of the Kerala General Sales Tax Rules regarding deduction of sales returns from total turnover for a specific assessment year.

Analysis:
The case involved a dealer in fans, sewing machines, and spare parts who claimed exemption for sales returns totaling Rs. 98,400 under rule 9(b) of the Kerala General Sales Tax Rules for the assessment year 1972-73. The rule allows deduction of amounts for goods returned within three months from the date of delivery when the goods are taxable to the dealer. The goods in question were returned in April, after the close of the assessment year on 31st March, 1972. The claim for exemption was negatived on the ground that the turnover for which exemption was claimed was not included in the return of assessment for the year. The Court found it impracticable to deny the claim based on the timing of the return and exemption claim relative to the assessment year.

The Government Pleader argued that the rule should be read in conjunction with the provisions of the Act, emphasizing the definition of "turnover" in section 2(xxvii) and the statutory basis for exemption provided by rule 9(b) in relation to the Act's scheme of yearly assessment. The Government Pleader contended that the Tribunal's decision denying the exemption was correct and aligned with the Act's assessment principles.

The assessee relied on decisions from the Madras and Andhra Pradesh High Courts supporting their position. The Madras High Court's rulings emphasized the timing of the claim for deduction in relation to the return of goods and the statutory provisions governing such exemptions. However, the Government Pleader cited a Full Bench decision of the Madras High Court that appeared to overrule the earlier decisions, leading to a debate on the interpretation and application of the relevant rules and provisions.

Ultimately, the Court sided with the assessee, holding that the claim for deduction could only be made after the return of goods and the refund of their sale price. The timing of the claim, post-April 1972, was deemed appropriate, and the denial of the deduction based on the turnover not being included in the assessment for the specific year was considered illogical. The Court referenced previous rulings from the Madras and Andhra Pradesh High Courts to support their decision. Consequently, the tax revision case was allowed, the Tribunal's order was set aside, and the matter was remanded for further action in accordance with the Court's observations.