1983 (4) TMI 245 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of sales turnover of empties (packing materials).
2. Taxability of local purchases of raw hides and skins attributable to inter-State sales of tanned hides.

Analysis:
1. The first issue pertains to the sales turnover of empties (packing materials) amounting to Rs. 48,179. The assessee contended that as they are not a dealer in packing materials, these sales should not be included in the taxable turnover. However, the Supreme Court's decision in State of Tamil Nadu v. Burmah Shell Co. Ltd. clarified that the extended definition of "business" encompasses all ancillary activities. Therefore, even if the assessee is not primarily engaged in selling packing materials, these sales are still part of the taxable turnover. The Board of Revenue correctly included this turnover in the taxable amount, which was upheld by the Court.

2. The second issue concerns the taxability of local purchases of raw hides and skins, amounting to Rs. 2,73,092, which were tanned and sold inter-State. The assessee argued that since the inter-State sales of tanned hides were already taxed under the Central Sales Tax Act, taxing the purchase value of raw hides under the State Sales Tax Act would amount to double taxation. The assessee relied on the decision in Sadak Thamby & Co. v. Appellate Assistant Commissioner of Commercial Taxes, but subsequent judgments like Guruviah Naidu & Sons v. State of Tamil Nadu and Gordon Woodroffe & Co. (Madras) P. Ltd. v. State of Tamil Nadu held a contrary view. The Court reiterated that the Supreme Court's decision in Guruviah Naidu case clarified that raw hides and tanned hides are distinct commodities for tax purposes. Therefore, the purchase value of raw hides can be taxed separately under the State Sales Tax Act, even if the tanned hides were taxed under the Central Sales Tax Act. The Board of Revenue's decision to tax this turnover was upheld by the Court.

In conclusion, the Court dismissed the tax case, upholding the Board of Revenue's decision on both issues. The assessee was liable to pay tax on the disputed turnovers. The Court awarded costs to the revenue, and the counsel's fee was fixed at Rs. 250.