1976 (5) TMI 31 - Tri - VAT and Sales Tax

Summary

Issues:
Assessment of taxable turnover based on timber trader's transactions, including sleeper supply and conversion of logs into sized timbers for inter-State trade.

Analysis:
The appellant, a timber trader, filed a return for the assessment year 1971-72, declaring a gross turnover of Rs. 7,973-83 and a taxable turnover of Rs. 4640-78. The assessing officer observed discrepancies in the appellant's transactions, specifically related to supplying sleepers to the Railway Sleeper Controller and converting round logs into sized timbers for inter-State trade. The assessing officer estimated the GTO at Rs. 1,48,335-39, fixed the taxable turnover at Rs. 1,45,012-34, and issued an additional demand note for Rs. 7,018-55.

The appellant contended that he did not include the full consideration received for sleeper supply in his turnover as he only received an advance from the DFO on behalf of the Sleeper Controller. He argued that the sale was directly to the Sleeper Controller, not the DFO, and thus should not be taxed under the OST Act. Additionally, he claimed that the conversion of logs into timbers did not constitute a violation as he accounted for all sales and the goods were in Orissa at the time of sale. However, these contentions were rejected by the assessing officer and the first appellate court.

During the second appeal, the appellant presented evidence to support his contentions, including passing lists, advance vouchers, final bills, railway invoices, and reminders, demonstrating that the transactions were with the Sleeper Controller, not the DFO. The tribunal found that the appellant's sale of sleepers was in pursuance of a contract with the Sleeper Controller, and the DFO acted as the agent of the Sleeper Controller for payment. Therefore, the addition of Rs. 75,083-24 to the GTO and TTO was deemed incorrect and was deleted.

Regarding the conversion of logs into sized timbers, the assessing officer noted transactions worth Rs. 65,286-32, which the appellant did not dispute. However, the tribunal held that selling converted logs constituted a violation as it involved selling a different commercial commodity. Thus, the addition on this account was upheld.

Conclusively, the tribunal partially allowed the appeal by deleting the inclusion of sales amounting to Rs. 75,083-24 from the GTO and TTO. The tribunal directed the tax to be recalculated, with any excess payment to be refunded to the appellant by the assessing officer.