1991 (3) TMI 354 - HC - VAT and Sales Tax

Summary

Issues:
Liability of the assessee to pay tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

The case involved a dispute regarding the liability of the assessee to pay tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959. The assessing authority determined the total taxable turnover of the assessee for the assessment year 1975-76 at Rs. 18,09,478, considering the purchase of raw bones from non-registered dealers and subsequent sale of bone-meal to foreign buyers. The Appellate Assistant Commissioner concluded that the sale of bone-meal did not result in a new commodity with a distinct identity from bones, hence section 7-A(1)(a) was not applicable. However, the sale to foreign buyers outside the state was held liable to tax at 4%. After granting relief for local and inter-State sales, the liability to tax under section 7-A was determined at Rs. 3,63,888, resulting in a redetermined taxable turnover of Rs. 16,75,182 assessable at 4%. The assessee appealed to the Sales Tax Appellate Tribunal, which partly allowed the appeal and dismissed the revenue's petition for enhancement.

The Tribunal considered the disputed turnover under section 7-A and referred to a previous judgment stating that a sale within the state would not attract the provisions of section 7-A. It was held that the export of goods was irrelevant in this context, and the assessee was found not liable to tax under section 7-A for the purchase in question. The Tribunal set aside the order of the Appellate Assistant Commissioner regarding this item.

The judgment in Ponnu Saw Mills v. State of Tamil Nadu was cited to differentiate between section 7-A(1)(b) and 7-A(1)(c), where export sales fall under the latter. It was emphasized that the sale to a place outside the state, not in the course of inter-State trade or commerce, would attract section 7-A(1)(c). The Tribunal's decision was deemed erroneous, and the order of the assessing authority was restored, holding that the transaction in the case fell within clause (c) of section 7-A(1) of the Act. The orders of the Tribunal and the appellate authority were set aside accordingly, and the petition was allowed with no costs.