1993 (1) TMI 256 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of sales tax on supplies of calendars in Tamil Nadu by a liaison office, determination of taxable turnover for the assessment year 1973-74, whether the assessee is a dealer within the State of Tamil Nadu, and whether the supplies are exigible to tax under the Tamil Nadu General Sales Tax Act.

Analysis:
The High Court of Madras addressed the revision petition filed by the Revenue against the order of the Tamil Nadu Sales Tax Appellate Tribunal. The case involved Parle Products (P) Limited, a liaison office in Madras, and the assessment of sales tax on supplies of calendars in Tamil Nadu for the assessment year 1973-74. The Tribunal had set aside the assessment, concluding that the supplies were not sales. The Revenue challenged this finding, specifically disputing the characterization of the assessee as "not a dealer within the State of Tamil Nadu."

The Court analyzed whether the supplies of calendars constituted sales exigible to tax under the Tamil Nadu General Sales Tax Act. It was established that there was a contract for the sale of calendars by the assessee to its customers, as orders were placed specifying quantity and price per calendar, with payment made by customers directly to the assessee. The Court rejected the Tribunal's reasoning, emphasizing that the payment by customers, even if partial, constituted a sale transaction.

Furthermore, the Court determined that the assessee, as a liaison office of Parle Products (Private) Limited, was engaged in business activities, including the supply of calendars. It clarified that profit motive or actual profit accrual was not necessary for an activity to qualify as business. The Court also noted that the assessee's place of business in Madras, where it maintained records of calendar supplies, supported its classification as a dealer within the State.

The Court disagreed with the Tribunal's conclusion that the assessee was not a dealer, highlighting that even a local branch of a company situated outside the State could fall under the definition of a dealer. Consequently, the Court allowed the revision petition, setting aside the Tribunal's order for the assessment year 1973-74 and restoring the assessing authority's decision confirmed by the Appellate Assistant Commissioner.

In conclusion, the High Court of Madras upheld the assessment of sales tax on the supplies of calendars by the assessee, considering them as taxable turnover under the Tamil Nadu General Sales Tax Act. The Court clarified the business status of the assessee and its classification as a dealer within the State, ultimately ruling in favor of the Revenue and overturning the Tribunal's decision.