1989 (11) TMI 303 - HC - VAT and Sales Tax

Summary

Issues:
Whether the sale price of returned goods can be included in the taxable turnover of a dealer under the Central Sales Tax Act.

Analysis:
The case involved a dealer, M/s. Parmali Wallace Ltd., dealing in the manufacture of wooden parts of electrical machines. The dealer had a provision where goods not conforming to purchaser specifications could be returned. The dispute arose when the dealer claimed that the value of returned goods, amounting to Rs. 21,699, should not be included in its turnover. The assessing authority, first appellate court, and second appellate court rejected the dealer's contention, stating that the sales were deemed complete as the goods were not returned within the stipulated period. The dealer argued that the goods were returned after a year without prior intimation, and thus, it should not be liable for the turnover inclusion.

The definition of "sale" under section 2(g) of the Central Sales Tax Act was considered, which includes any transfer of property in goods for valuable consideration. The court noted that the agreement for return of goods if not conforming to specifications did not exclude the transactions from the ambit of a sale. However, the crucial issue was whether the dealer could deduct the value of returned goods from the turnover. Section 8A of the Act allows deductions for goods returned within specified periods, which was not the case here. As the goods were returned after a year and without proper intimation, the court held that the dealer was not entitled to deduct Rs. 21,699 from its taxable turnover.

In conclusion, the court ruled in favor of the Revenue, stating that the sale price of returned goods could be included in the dealer's taxable turnover. The reference was answered in the affirmative, against the applicant-dealer. No costs were awarded in the judgment.