1997 (2) TMI 527 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of gunny bags used as packing materials sold along with coconuts.
2. Interpretation of provisions of section 3(7) and 3(8) of the Tamil Nadu General Sales Tax Act, 1959.
3. Exercise of suo motu power under section 34 of the Act by the Joint Commissioner.

Analysis:
1. The assessee, a dealer in coconuts, was assessed on a total and taxable turnover for a specific year. The assessing officer rejected the accounts due to defects and made a best judgment assessment. The Appellate Assistant Commissioner held that if the content (coconuts) is not taxable, the container (gunny bags) is also not taxable. The Joint Commissioner disagreed, exercising suo motu power under section 34, and set aside the Appellate Assistant Commissioner's order, restoring the assessing officer's assessment. The court examined the taxability of gunny bags sold with coconuts and the interpretation of relevant provisions.

2. The court considered the provisions of section 3(7) and 3(8) of the Act. Section 3(7) states that the turnover of goods sold with containers or packing materials includes the price of such containers, to be taxed at the rate applicable to the goods. Section 3(8) exempts the container's value if the goods inside are tax-exempt. The court emphasized that the container's taxability depends on the goods it contains. The court noted an amendment aimed at rationalizing packing charges to prevent evasion and harassment to dealers.

3. The assessee argued that the amendments to sections 3(7) and 3(8) postdated the decisions relied upon by the Joint Commissioner and the Additional Government Pleader. As the coconuts were tax-exempt, the gunny bags were also exempt. The court found that the decisions cited were not applicable post-amendment and set aside the Joint Commissioner's order, reinstating the Appellate Assistant Commissioner's decision. The court allowed the tax case appeal, emphasizing the tax exemption based on the taxability of the goods contained in the container.

Separate Judgment:
- The court dismissed T.C.M.P. No. 91 of 1997 since the main appeal was allowed, thereby concluding the case without costs.