1988 (5) TMI 353 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption of sales tax on the sale of wrappers, cartons, and labels to specific manufacturers.
2. Treatment of printing charges as part of the taxable turnover.

Analysis:

Issue 1:
The Sales Tax Tribunal rejected the claim for exemption of sales tax by the dealer on the sale of wrappers, cartons, and labels to various manufacturers. The dealer claimed exemption based on declarations in form D and form XXXIV. However, it was found that the purchasing dealers were not authorized to purchase these materials for resale inside the State. The Sales Tax Officer, Assistant Commissioner, and the Member of the Additional Sales Tax Tribunal all concurred that the dealer was not entitled to the claimed exemption. The matter was examined in light of section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act. The dealer's counsel argued that certain purchasing dealers were entitled to purchase these materials as raw materials for manufacturing finished goods inside the State. Citing relevant legal precedents, the counsel contended that the purchasing dealers should be entitled to claim the exemption. The court found discrepancies in the registration certificates of the purchasing dealers and decided to remit the case back to the Sales Tax Tribunal for further examination to determine the entitlement of the purchasing dealers to claim exemption based on the materials purchased.

Issue 2:
The second question pertained to the treatment of a sum of Rs. 32,615.25 representing labor charges for printing. The amount was included in the taxable turnover of the dealer. The dealer argued that these charges were separate from the sale of materials and should be excluded from the taxable turnover. However, based on a previous court decision and the absence of specific agreements or work orders proving the divisibility of the contracts, the court held that the labor charges for printing should be included in the taxable turnover. The court emphasized the importance of producing evidence to demonstrate the separateness of the transactions. As the dealer failed to provide such evidence, the court ruled in favor of including the labor charges in the taxable turnover.

In conclusion, the court remitted issue 1 back to the Sales Tax Tribunal for further examination and answered issue 2 in the affirmative, ruling that the labor charges for printing should be included in the taxable turnover.