1991 (8) TMI 315 - HC - VAT and Sales Tax

Summary

Issues:
1. Determination of whether the transaction is a case of sale return or unfructified sale.

Analysis:
The High Court of Madras heard a tax revision filed by the Revenue against an order of the Tamil Nadu Sales Tax Appellate Tribunal. The Tribunal noted that the purchase orders were for specific items of goods not yet in existence, indicating future goods to be manufactured by the appellants. The goods supplied were rejected due to defects, and bills were returned unpaid. The key issue was whether the transaction constituted a sale return or an unfructified sale.

The supply orders clearly stated that goods must conform to approved samples and specifications, with rejection leading to return at the cost of the assessee. The orders were for goods not yet in existence, making them future and unascertained. The Tamil Nadu General Sales Tax Act specifies that sale of goods not in existence is concluded upon appropriation by the purchaser. In this case, the goods were rejected by the Tamil Nadu Electricity Board, and the bills were returned, indicating non-appropriation. The Court found errors in treating the case as a sale return, emphasizing the distinction between return of goods and rejection of goods as per legal precedents.

Referring to a previous case, the Court reiterated the difference between sale return and unfructified sales. It concluded that the transaction in question was an unfructified sale, not a sale return. Therefore, the provisions of section 13(5) of the Tamil Nadu General Sales Tax Act, regarding time-barring claims, did not apply. The Tribunal's view that no sales occurred to attract tax, deeming it an unfructified sale, was upheld as correct. Consequently, the tax revision was dismissed with costs, and the petition was dismissed.