1981 (8) TMI 200 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 84 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 regarding levy of sales tax on timber sales.

Analysis:
The petitioner, a sales tax assessee, contested an assessment by the Deputy Commercial Tax Officer, considering sales of timber as first sales under entry 84 of the Act. The Appellate Assistant Commissioner and Sales Tax Appellate Tribunal upheld the assessment. The petitioner argued that its timber sale was a second sale, not subject to single point levy.

The Tribunal relied on an explanation added to entry 84 by an amending legislation in 1975, deeming sales by forest contractors of timber purchased in forest auctions as first sales. This explanation altered the previous method of determining first sales based on factual analysis.

The judgment highlighted the distinction between auctioning forest coupes and selling timber from depots. The statutory fiction in the explanation only applied to auctioned coupes, not general timber sales. The Tribunal erred in extending the fiction to the petitioner's case of purchasing timber from a government depot, not from forest auctions.

Ultimately, the Court set aside the Tribunal's order, ruling that the petitioner's turnover was not subject to sales tax as a deemed first sale. The petitioner was awarded costs from the department, including counsel's fee.