1980 (9) TMI 263 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 regarding liability to tax on purchase turnover.
2. Application of the term "despatch" in Section 7-A(1)(c) of the Act in the context of transporting goods outside the State.

Analysis:
1. The judgment involved Tax Cases related to the tax payable under the Tamil Nadu General Sales Tax Act, 1959, and the Tamil Nadu Additional Sales Tax Act, 1970. The main issue revolved around the liability to purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959. The Court referred to previous judgments that established the scope of Section 7-A(1)(a) concerning the purchase of old jewelry and its conversion into new jewelry for sale within the State. The Court held that such transactions fell under the purview of Section 7-A(1)(a) and were subject to tax.

2. The subsequent question pertained to the liability to tax on turnovers involving the purchase of old jewels and their sale outside the State under Section 7-A(1)(c) of the Act. The Tribunal concluded that carrying the old jewelry to Bombay by the dealers constituted "despatch of the goods" under the Act, thereby making the petitioners liable for tax on the purchase turnover. However, the Court disagreed with the Tribunal's interpretation, emphasizing that the term "despatch" implied sending off or away with promptness or speed, which did not align with a person carrying the goods personally. Therefore, the Court held that the goods not being despatched from the State meant that Section 7-A(1)(c) did not apply to the transaction, leading to the exclusion of the turnover from taxation.

3. The Court highlighted a previous Supreme Court judgment to clarify the interpretation of Section 7-A and emphasized the need to preserve the effectiveness of the provision to prevent tax evasion. Consequently, the Court directed the matter to be remanded to the Sales Tax Appellate Tribunal for determining the petitioners' liability under the relevant tax Acts after excluding the turnover in question. The judgment concluded with an order for no costs in any of the cases.

In summary, the judgment addressed the interpretation of Section 7-A of the Tamil Nadu General Sales Tax Act, 1959, regarding tax liability on purchase turnover and scrutinized the application of the term "despatch" in the context of transporting goods outside the State. The Court's decision clarified the scope of the provisions and emphasized the need to interpret them in a manner that preserves their efficacy in preventing tax evasion.