1984 (7) TMI 337 - HC - VAT and Sales Tax

Summary

Issues:
1. Tax liability on the sale proceeds of a second-hand lorry by the assessee.
2. Entitlement to claim deduction towards transport charges for the transport of bricks supplied by the assessee to customers.

Analysis:
1. The first issue in this tax revision case pertains to the tax liability on the sale proceeds of a second-hand lorry by the assessee. The Tribunal held that the assessee, although not the first dealer in the State, failed to prove that the earlier sales of the lorry had suffered tax, making her liable to be taxed on the sale proceeds. The Tribunal rejected the assessee's argument that she is primarily in the business of manufacturing bricks and should not be taxed on the sale of the lorry. However, the High Court disagreed with the Tribunal's decision, stating that the assessee, being at least the fourth owner of the lorry in the State, is not required to prove that the earlier sales had suffered tax to claim exemption on the grounds of a second sale. The Court emphasized that the incidental activity of selling a second-hand lorry by the assessee, even though her primary business is in bricks, makes the sale taxable in her hands. The matter was remitted back to the Tribunal for further investigation to determine the tax liability of the earlier owners of the lorry.

2. The second issue concerns the entitlement of the assessee to claim a deduction towards transport charges for the transport of bricks supplied to customers. The Tribunal denied the deduction, stating that the mere separate listing of transport charges on bills does not prove a separate bargain between the parties for payment of transport charges. However, the High Court found the Tribunal's decision erroneous, distinguishing it from a previous case where a similar situation was dealt with differently. The Court referenced a case where a dealer selling blue-metal jelly separately indicated and charged for transport charges, allowing for a deduction. Applying the same principle, the Court held that the assessee is entitled to a deduction towards transport charges for the delivery of bricks to customers. The tax revision case was allowed in favor of the assessee, with no order as to costs.