1991 (2) TMI 372 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of taxable turnover under the Tamil Nadu General Sales Tax Act, 1959.
2. Disallowance of claim on turnover of firewood.
3. Applicability of section 7-A of the Act on purchase turnover of timber.
4. Dispute regarding the turnover of cut-wastes.
5. Correct levy of tax on sales turnover.

Analysis:
1. The case involved a revision by the Revenue against the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the assessment of taxable turnover under the Tamil Nadu General Sales Tax Act, 1959. The assessing authority had determined the taxable turnover based on the sale of packing cases, cut waste, and purchase value of timber consumed in the manufacture of packing cases. The Tribunal made several findings regarding the assessment, disallowing certain claims and modifying the tax rate on specific turnovers.

2. The contention regarding the turnover of firewood was raised by the assessee at the appellate stage. The assessee argued that the purchased goods were used for sizing cut-ends into shooks for packing cases and not for manufacturing other goods. The Tribunal partially accepted the plea, recognizing that the cut-wastes were wood scrap and sawdust taxable at a multi-point rate under the Act. The Tribunal set aside a portion of the turnover related to sales in sundries to retail consumers as fuel.

3. The dispute centered around the applicability of section 7-A of the Act on the purchase turnover of timber. The Revenue argued that since the purchased timber was consumed in the manufacture of packing cases, it should be taxed under section 7-A. However, the Tribunal found that the assessee did not manufacture packing cases but only sized the cut-ends into planks and shooks, which were sold for use in packing cases. The Tribunal concluded that the purchase turnover of timber was not liable to tax under section 7-A as the goods were not consumed in the manufacture of other goods.

4. Another issue was the disagreement over the turnover of cut-wastes. The Tribunal found that the cut-wastes were wood scrap and sawdust taxable at a multi-point rate, contrary to the claim that they were sold only as firewood. The Tribunal set aside a portion of the turnover related to sales in sundries to retail consumers as fuel.

5. Lastly, the correct levy of tax on sales turnover was addressed. The Tribunal upheld the Revenue's claim that the sales turnover should be taxed at a single-point rate of 5%, as opposed to the 4% multi-point rate levied by the assessing authority. The Tribunal modified the tax rate accordingly, enhancing it to 5% single-point tax on the specified turnover.

In conclusion, the High Court dismissed the Revenue's revision, upholding the Tribunal's findings. The Court emphasized that the Tribunal's factual findings were based on a proper appreciation of the material on record and were not irrational. The Court held that the turnover assessed under section 7-A was not legally correct and unsustainable, as the goods were not consumed in the manufacture of other goods. Consequently, the revision was dismissed, and no costs were awarded.