1983 (7) TMI 289 - HC - VAT and Sales Tax

Summary

Issues:
1. Inclusion of purchase turnover under section 7-A in total turnover.
2. Classification of copper wire manufactured and sold by the assessee under entry 41 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.

Analysis:

Issue 1:
The High Court considered whether the purchase turnover under section 7-A of the Tamil Nadu General Sales Tax Act, 1959, should be included in the total turnover of the assessee. The Court referred to a recent Full Bench decision and held that the purchase turnover taxable under section 7-A must form part of the total turnover. The Tribunal's view, which excluded purchase turnover from total turnover, was deemed inconsistent with the Full Bench decision and was set aside.

Issue 2:
Regarding the classification of the copper wire manufactured by the assessee under entry 41, the Court analyzed the definition of "electrical goods" under the Act. The Tribunal had held that only wires used for energy transmission could be classified under entry 41, excluding wires used for earthing purposes. However, the Court disagreed, stating that the amendment to entry 41 intended to broaden the scope to include all kinds of electrical goods, irrespective of energy application. The Court emphasized that even wires used for earthing purposes fell under the definition of "electrical goods."

The Court noted a discrepancy in the assessment where the assessing authority assumed all sales were to electrical traders, while later acknowledging sales to electrical dealers. Since the substantial use of the manufactured wire was unclear, the Court remitted the matter to the assessing authority to determine if the dominant use was for earthing purposes. The assessment was to be finalized based on this finding.

Ultimately, the Court allowed the tax case, remitting the matter for further investigation into the substantial use of the manufactured wire. No costs were awarded in the judgment.