1989 (4) TMI 314 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the body built on the chassis of station wagon or autorickshaws, which has already suffered sales tax, is liable to be taxed under Schedule I item 3 of the Tamil Nadu General Sales Tax Act.
2. Whether the contract for supply of finished products like station wagon or autorickshaw exempts the liability for sales tax on the body built.

Analysis:
The judgment addresses the issue of whether bodies built on chassis that have already been taxed are subject to further taxation under the Tamil Nadu General Sales Tax Act. The petitioners argued that since the body had already suffered sales tax, there should be no additional tax liability. However, the assessing authority and the Tribunal ruled against this contention based on invoices produced. The petitioners further argued that supplying only the finished product exempts them from sales tax on the body built. The Tribunal's order highlighted that the contracts were for the delivery of finished vans or autorickshaws, not for separate chassis and body supply. The Tribunal emphasized that there was no evidence to support the claim that the sale of chassis and body were separate transactions, thus upholding the tax liability. The judgment referenced the decision in Rane (Madras) Ltd. v. State of Kerala [1968] 21 STC 420 (Ker) [FB] to support its conclusion.

The Tribunal's detailed analysis revealed that the orders were specifically for finished vehicles, and any mention of chassis was incidental to the delivery of completed vans or autorickshaws. The judgment emphasized that the sale was of the finished vehicle as a whole, not of individual components like chassis and body. The Tribunal's findings indicated that the petitioners did not entertain orders for chassis separately and treated the chassis cost as an advance payment against the value of the finished vehicle. The judgment concluded that the previous taxation of the body did not exempt it from further taxation, as the sale was deemed to be of the complete vehicle. The reliance on the precedent in Rane (Madras) Ltd. v. State of Kerala [1968] 21 STC 420 (Ker) [FB] supported the Tribunal's decision and upheld the tax liability on the bodies built on the chassis.

In light of the above analysis, the High Court dismissed the tax revision cases, affirming the Tribunal's order. The judgment concluded that the sale was of the finished vehicle, and there was no separate transaction for the chassis and body. Therefore, the tax liability on the bodies built on chassis that had already suffered sales tax was upheld. The petitioners' argument that the body's previous taxation exempted it from further tax was rejected, emphasizing that the sale was of the complete vehicle, not its individual components.