1989 (6) TMI 273 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of sales tax on materials used in photography works contract.

Analysis:
The petitioner, a photographer, challenged the assessment of sales tax on materials used in photography works contract by the Superintendent of Taxes. The petitioner contended that the works undertaken were indivisible works contracts and not sales of goods, relying on the Supreme Court decision in B.C. Kame [1977] 39 STC 237. The Superintendent of Taxes, however, levied tax on the estimated sale value of materials used in the works contract, assuming a sale transaction. The High Court analyzed the case based on the Tripura Sales Tax Act, 1976, and relevant legal provisions.

The Court observed that the petitioner's occupation as a photographer involved skill and labor, with receipts from works contracts not constituting consideration for the sale of goods. The Court noted that the petitioner did not sell the materials purchased at a concessional rate, using them in works contracts instead. The critical issue was whether sales tax could be levied on materials used in an indivisible works contract based on concessional purchases under the Central Sales Tax Act.

The Court examined the statutory provisions of the Tripura Sales Tax Act, emphasizing that tax is payable only on amounts received for the sale of goods. The absence of a sale of goods in the present case meant that the assessing officer had no authority to levy tax on assumed sales of materials. The Court highlighted that the taxing statute cannot be extended beyond its clear language, and no tax can be imposed unless explicitly provided for.

Referring to legal precedents such as State of Madras v. Gannon Dunkerley & Co. [1958] 9 STC 353 and Carl Still v. State of Bihar [1961] 12 STC 449, the Court emphasized that passing property in a transaction does not necessarily constitute a sale. The Court concluded that the levy of tax on materials used in works contracts was not sustainable in law. The High Court quashed the assessment orders related to the tax on materials and directed the Superintendent of Taxes to remove those amounts from the petitioner's turnover. The petition was allowed, with the respondents ordered to pay costs to the petitioner.