1998 (8) TMI 591 - HC - VAT and Sales Tax

Summary

Issues:
1. Tax set-off entitlement for rice sold from tax-suffered paddy.
2. Existence of implied or express contract of sale for gunny bags.

Issue 1: Tax Set-Off for Rice Sold from Tax-Suffered Paddy:
The case involved the assessee, Food Corporation of India, appealing against the inclusion of gunny bag costs in the turnover for tax assessment. The assessing officer, Deputy Commissioner, and Appellate Tribunal upheld the inclusion. The petitioner argued that the cost of gunny bags was separately indicated in the invoice, but the authorities found no evidence supporting this claim. The Tribunal and assessing officer did not agree that the cost was separately mentioned, leading to the rejection of the petitioner's contention. The petitioner also sought a set-off for taxes paid on paddy against the tax on rice, but this was denied by all authorities. The Tribunal's order lacked clarity on the matter. The petitioner relied on a judgment stating that the tax paid on paddy can be set-off against rice tax, regardless of procurement date. The Court remanded the case to verify if tax was paid on paddy procured pre-September 7, 1976, for potential set-off against rice tax.

Issue 2: Implied or Express Contract of Sale for Gunny Bags:
The second issue revolved around whether there was an implied or express contract of sale for gunny bags. The petitioner argued that despite invoicing contents and containers separately, with a significant cost for gunny bags charged to the buyer, there was a contract. However, the authorities did not find evidence of a separate mention of gunny bag costs in the invoice. The Tribunal's order lacked clarity on this matter as well. The Court did not find any reason to disagree with the Tribunal's view, indicating that without evidence of separate mention in the invoice, the cost of gunny bags is included in the turnover of rice.

In conclusion, the Court partly allowed the petition, remanding the matter to the assessing officer to determine if tax was paid on paddy procured pre-September 7, 1976, for possible set-off against rice tax. The assessing officer was directed to resolve the issue within six months from the date of receiving the order.