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1975 (2) TMI 112
Issues Involved:
1. Dismissal and restoration of the main eviction petition.
2. Revival of interlocutory orders under Section 15(2) of the Act.
3. Striking off the defense under Section 15(7) of the Act.
Detailed Analysis:
1. Dismissal and Restoration of the Main Eviction Petition:
The primary issue revolves around the dismissal of the main eviction petition on 17th February 1966 due to the non-appearance of the respondent landlady. The petition was later restored on 5th February 1969 by the Rent Control Tribunal. The legal representatives of the tenant argued that the interlocutory order dated 24th September 1965, passed under Section 15(2) of the Act, lapsed upon dismissal and did not revive upon restoration of the main petition. The court, however, found that under the provisions of the Civil Procedure Code, specifically Order 9, Rule 8, and Rule 9, the restoration of the petition reinstates all previous proceedings and interim orders as if the dismissal had not occurred.
2. Revival of Interlocutory Orders under Section 15(2) of the Act:
The appellants contended that the interlocutory order requiring the deposit of rent lapsed with the dismissal of the main petition and needed to be reissued upon restoration. The court rejected this argument, citing various precedents from the High Courts of Madras, Patna, and Allahabad, which supported the view that upon restoration, all prior orders and proceedings revive and continue from the point of interruption. The court emphasized that the procedural rules of the Civil Procedure Code apply, making it unnecessary to reissue the interlocutory order upon restoration of the main petition.
3. Striking Off the Defense under Section 15(7) of the Act:
The respondent landlady filed an application on 18th February 1970 to strike off the defense of the appellants due to non-payment of rent for December 1969, January 1970, and April 1970. The Additional Controller struck off the defense on 24th September 1970, a decision upheld by the Rent Control Tribunal. The court held that the appellants violated the terms of the order under Section 15(2) of the Act by failing to deposit the required rent after the restoration of the main petition. The court noted that the discretionary power under Section 15(7) of the Act was exercised appropriately by the Controller and affirmed by the Tribunal, and thus, it was beyond the jurisdiction of the High Court to interfere with this discretion in a second appeal.
Conclusion:
The court concluded that the restoration of the main eviction petition reinstates all prior interlocutory orders, including those under Section 15(2) of the Act. The appellants were bound to comply with these orders post-restoration, and their failure to do so justified the striking off of their defense under Section 15(7) of the Act. The High Court affirmed the decisions of the lower courts, emphasizing the consistency of these rulings with established legal principles and precedents.
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1975 (2) TMI 111
Whether an order for removal from service contrary to regulations framed under the Oil and Natural Gas Commission Act, 1959; the Industrial Finance Corporation Act, 1948; and the Life Insurance Corporation Act, 1956 would enable the employees to a declaration against the statutory corporation of continuance in service or would only give rise to a claim for damages?
Whether an employee of a statutory corporation is entitled to claim protection of Articles 14 and 16 against the Corporation?
Held that:- Rules and regulations framed by the Oil and Natural Gas Commission, Life Insurance Corporation and the Industrial Finance Corporation have the force of law. The employees of these statutory bodies have a statutory status and they are entitled to declaration of being in employment when their dismissal or removal is in contravention of statutory provisions. By way of abundant caution we state that these employees are not servants of the Union or the State. These statutory bodies are "authorities&" within the meaning of Article 12 of the Constitution.
The employees of these statutory bodies have a statutory status and they are entitled to a declaration of being in employment when their dismissal or removal is in contravention of statutory provisions.
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1975 (2) TMI 110
The petitioner challenged sales tax recovery proceedings, claiming not to be a partner in the assessed firm. The court directed the authority to decide the objection filed by the petitioner regarding his partnership status before proceeding with recovery. The writ petition was dismissed. (Case: 1975 (2) TMI 110 - Allahabad High Court)
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1975 (2) TMI 109
Issues Involved:
1. Whether the sales amounting to Rs. 64,849-7-0 had taken place outside the State of Bombay.
2. Whether there was any evidence before the majority of the Tribunal to conclude that the goods moved from the State of Bombay to Ajmer under the contract of sale.
Issue-Wise Detailed Analysis:
Issue 1: Whether the sales amounting to Rs. 64,849-7-0 had taken place outside the State of Bombay.
The primary contention was whether the sales in question occurred outside the State of Bombay. The respondents, registered dealers under the Bombay Sales Tax Act, 1953, supplied goods to the Western Railway under a contract specifying "free delivery in Bombay." However, the despatch instructions indicated that the goods were to be delivered to the Inspection Officer in Bombay for onward despatch to Ajmer. The Sales Tax Officer included the sales amount in the taxable turnover, which was contested by the respondents. The Assistant Commissioner of Sales Tax and the Deputy Commissioner of Sales Tax upheld this inclusion, but the Sales Tax Tribunal ruled that the sales did not occur within Bombay, referencing Article 286 of the Constitution of India.
The High Court examined the terms of the contract, noting that the final acceptance of goods was at Ajmer, not Bombay. The inspection in Bombay was preliminary, and the consignee at Ajmer had the right to reject the goods upon final inspection. This indicated that the sale was not complete until acceptance at Ajmer. The Court referred to the Supreme Court's decision in Bengal Timber Trading Co. Ltd. v. Commissioner of Sales Tax, which held that actual delivery is complete only upon acceptance by the consignee at the destination. Thus, the High Court concluded that the sales were not taxable by the State of Bombay.
Issue 2: Whether there was any evidence before the majority of the Tribunal to conclude that the goods moved from the State of Bombay to Ajmer under the contract of sale.
The second issue addressed whether there was evidence to support the Tribunal's conclusion that the goods moved from Bombay to Ajmer under the contract. The contract explicitly required the goods to be consigned to Ajmer. Even the dissenting Tribunal member acknowledged that the goods were sent to Ajmer after inspection in Bombay. The High Court noted that it was uncontested that the goods moved from Bombay to Ajmer and were delivered there.
The Court dismissed the argument that the respondents failed to prove the movement of goods, as the contract and uncontested facts clearly indicated such movement. Therefore, the Tribunal's conclusion was supported by sufficient evidence.
Conclusion:
The High Court answered both questions in the affirmative, affirming that the sales took place outside the State of Bombay and that there was evidence to support the movement of goods from Bombay to Ajmer under the contract. The applicant was ordered to pay the respondents' costs for the reference.
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1975 (2) TMI 108
Issues Involved:
1. Validity of the assessment proceedings under the Bengal Finance (Sales Tax) Act, 1941, and the Central Sales Tax Act, 1956.
2. Whether the petitioner can be taxed on jute goods after paying tax on raw jute.
3. Validity of the tax rates under section 5 of the Bengal Finance (Sales Tax) Act, 1941, and section 3 of the Bengal Raw Jute Taxation Act, 1941.
4. Jurisdiction to assess Central sales tax in the absence of a valid rate under West Bengal sales tax law.
5. Interpretation of "stage" in section 15 of the Central Sales Tax Act, 1956.
Issue-wise Detailed Analysis:
1. Validity of the Assessment Proceedings:
The petitioner challenged the notices of assessment under the Bengal Finance (Sales Tax) Act, 1941, and the Central Sales Tax Act, 1956, for the four quarters ending March 31, 1971. The petitioner argued that the State of West Bengal was not entitled to demand sales tax on jute goods after already levying tax on raw jute under the Bengal Raw Jute Taxation Act, 1941. The petitioner sought writs of prohibition and mandamus to stop the assessment proceedings and to refund the taxes already paid.
2. Taxation on Jute Goods After Raw Jute Tax:
The petitioner argued that raw jute and the jute goods manufactured from it are the same commodity under entry (v) of section 14 of the Central Sales Tax Act, 1956. It was contended that since tax was already paid on raw jute, the State could not levy sales tax on the manufactured jute goods, as it would be another "stage" of taxation, violating section 15 of the Central Sales Tax Act. The court rejected this argument, stating that raw jute and finished jute goods are distinct commercial commodities and the prohibition against multi-stage taxation applies to the same commodity, not to different commodities derived from it.
3. Validity of Tax Rates:
The petitioner challenged the validity of the tax rates under section 5 of the Bengal Finance (Sales Tax) Act, 1941, and section 3 of the Bengal Raw Jute Taxation Act, 1941, arguing that the substitution of "three per cent" for "two per cent" by the Finance Act, 1966, expired after the financial year 1966-67. The court held that the amendments made by the Finance Act, 1966, were permanent and not limited to the financial year 1966-67. Therefore, the tax rates were valid and not ultra vires section 15 of the Central Sales Tax Act, 1956, or article 286 of the Constitution.
4. Jurisdiction to Assess Central Sales Tax:
The petitioner contended that the absence of a valid rate under the West Bengal sales tax law rendered section 8(2)(a) of the Central Sales Tax Act, 1956, inoperative. The court did not find merit in this argument and upheld the jurisdiction of the respondents to assess Central sales tax.
5. Interpretation of "Stage" in Section 15:
The petitioner argued that "stage" in section 15 referred to different stages of production of jute goods, implying that tax should be levied either on raw jute or on finished jute goods, but not both. The court interpreted "stage" to mean points of successive sales and purchases, not stages of production. It held that the prohibition in section 15 is against multi-point taxation of the same commodity, not different commodities derived from the same raw material. The court cited several Supreme Court decisions supporting this interpretation.
Conclusion:
The court dismissed the petitions, holding that the assessment proceedings were valid, the tax rates were lawful, and the interpretation of "stage" did not support the petitioner's arguments. The court directed the respondents to complete pending assessments expeditiously and restrained them from communicating the assessment order or serving demand notices for eight weeks. Petitions were dismissed with no order as to costs.
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1975 (2) TMI 107
Issues Involved:
1. Liability to pay purchase tax under Section 7A of the Bombay Sales Tax Act, 1953.
2. Applicability of Notification No. STA. 1058-G-1 dated 7th October, 1958, and Notification No. STR. 1058-(xiii)-G-1 dated 10th September, 1959.
3. Definition and interpretation of "resale" under the Bombay Sales Tax Act.
4. Constitutional restrictions on the imposition of sales tax by the State.
Detailed Analysis:
1. Liability to Pay Purchase Tax under Section 7A of the Bombay Sales Tax Act, 1953:
The applicants were registered dealers who sold goatskins to a foreign buyer, Raznoexport, under a contract dated 27th December, 1958. The dispute arose regarding the purchase tax on goatskins bought from unregistered dealers during the assessment periods 1st April, 1958, to 31st March, 1959, and 1st April, 1959, to 31st December, 1959. The Sales Tax Officer, Assistant Commissioner of Sales Tax, Commissioner of Sales Tax, and the Sales Tax Tribunal all disallowed the applicants' claim for exemption from purchase tax under Section 7A of the Bombay Sales Tax Act, 1953, leading to this reference.
2. Applicability of Notification No. STA. 1058-G-1 dated 7th October, 1958, and Notification No. STR. 1058-(xiii)-G-1 dated 10th September, 1959:
The applicants argued that their purchases from unregistered dealers were exempt from purchase tax under the aforementioned notifications. The Tribunal, however, confirmed the levy of purchase tax, leading to the reframed question: "Whether the applicants were liable to pay purchase tax under Section 7A of the Bombay Sales Tax Act, 1953, on their purchases of goatskins from unregistered dealers and were not entitled to claim exemption under Notification No. STA 1058-G-1 dated 7th October, 1958, and Notification No. STR. 1058-(xiii)-G-1 dated 10th September, 1959?"
3. Definition and Interpretation of "Resale" under the Bombay Sales Tax Act:
The term "resale" was crucial to determining the applicability of the tax exemption. The Bombay Sales Tax Act defines "sale" in Section 2(13), which includes sales made within the pre-Reorganisation State of Bombay. The notifications issued under Section 7A of the Act did not define "resale," leading to the interpretation that "resale" must mean resale within the State. The Court held that the expression "resale" in the notifications must bear the same meaning as in Section 2(13) of the Act, which includes sales within the pre-Reorganisation State of Bombay.
4. Constitutional Restrictions on the Imposition of Sales Tax by the State:
The Court examined the constitutional provisions under Article 286 and the Central Sales Tax Act, 1956, particularly Sections 3, 4, and 5, which delineate the scope of State taxation powers. The Court noted that the State's power to tax is limited to intra-State sales and purchases, and does not extend to inter-State trade or commerce or export/import transactions. The Court clarified that the issue was not about taxing the sale to Raznoexport but about the taxability of the preceding purchase of goatskins by the applicants.
The Court concluded that the sales made by the applicants to Raznoexport, which occasioned the export of goods, were intra-State sales as per the principles laid down in Section 4(2) of the Central Sales Tax Act, 1956. Therefore, these sales were "resales" within the State, and the applicants were entitled to claim exemption from purchase tax under the notifications.
Conclusion:
The Court answered the reframed question in the negative, holding that the applicants were not liable to pay purchase tax under Section 7A of the Bombay Sales Tax Act, 1953, on their purchases of goatskins from unregistered dealers and were entitled to claim exemption under the relevant notifications. The respondent was directed to pay the costs of the references, and the fee paid by the applicants was ordered to be refunded.
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1975 (2) TMI 106
The Karnataka High Court dismissed a revision petition under the Karnataka Sales Tax Act, 1957, related to the classification of french-polish as a varnish. The court held that french-polish falls under the definition of varnish and is taxable at the rate specified in the Second Schedule of the Act. The petition was dismissed with no costs.
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1975 (2) TMI 105
Issues Involved:
1. Nature of the relationship between the respondent and the distributors.
2. Taxability of transactions under the Bombay Sales Tax Act, 1959.
3. Interpretation of the agreement between the respondent and the distributors.
4. Applicability of the precedent set by the Supreme Court in Hafiz Din Mohammad Haji Abdulla v. State of Maharashtra.
5. Relevance of the decision in Daruvala Bros. (P.) Ltd. v. Commissioner of Income-tax, Bombay.
6. Analysis of the transactions with M/s. Sivaram & Swamy.
Detailed Analysis:
1. Nature of the Relationship between the Respondent and the Distributors:
The primary issue was whether the relationship between the respondent and the distributors was that of principal and agent or vendor and vendee. The Tribunal concluded that the distributors were agents of the respondent, and the property in the goods did not pass to the distributors. This conclusion was based on the terms of the agreement, which indicated that the transactions were agency transactions and not sales.
2. Taxability of Transactions under the Bombay Sales Tax Act, 1959:
The Sales Tax Officer included the amounts representing transactions between the respondent and the distributors in the taxable turnover of the respondent, treating them as sales. However, the Tribunal held that these transactions were not sales and thus not liable to tax under the said Act. The High Court upheld this view, stating that the despatch of goods to the distributors did not constitute a sale.
3. Interpretation of the Agreement between the Respondent and the Distributors:
The agreement specified that prices would be maintained in parity with allied manufacturers, and the respondent would allow a commission of five per cent to the distributors. The agreement also provided for price fluctuations to be accounted for by issuing debit or credit notes. The High Court found that these terms indicated an agency relationship rather than a vendor-vendee relationship.
4. Applicability of the Precedent Set by the Supreme Court in Hafiz Din Mohammad Haji Abdulla v. State of Maharashtra:
The High Court referred to the Supreme Court's decision in Hafiz Din Mohammad Haji Abdulla v. State of Maharashtra, which held that a sale is a transfer of property for a price. The Supreme Court had concluded that the relationship in that case was of principal and agent. The High Court found significant similarities between the agreement in question and the one in the Supreme Court case, leading to the conclusion that the transactions were not sales.
5. Relevance of the Decision in Daruvala Bros. (P.) Ltd. v. Commissioner of Income-tax, Bombay:
The High Court distinguished the present case from the decision in Daruvala Bros. (P.) Ltd. v. Commissioner of Income-tax, Bombay, where the agreement was construed as a sale. The High Court noted that the terms of the agreement in Daruvala Bros. were different, particularly the clause preventing the assessee from making contracts in the name of the importers. Such clauses were absent in the present case, reinforcing the agency nature of the relationship.
6. Analysis of the Transactions with M/s. Sivaram & Swamy:
The Tribunal treated the agreement with M/s. Sivaram & Swamy as materially similar to the one with Herbertsons Private Limited. Letters from Sivaram & Swamy confirmed their role as agents, further supporting the Tribunal's conclusion that these transactions were not sales. The High Court agreed with this assessment, stating that the despatch of goods to Sivaram & Swamy did not amount to sales.
Conclusion:
The High Court concluded that the relationship between the respondent and the distributors was that of principal and agent, and the transactions were not sales liable to tax under the Bombay Sales Tax Act, 1959. The question referred to the High Court was answered in the affirmative, and the applicant was ordered to pay the costs of the reference.
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1975 (2) TMI 104
Issues:
Interpretation of entry 12 of Schedule A under the Bombay Sales Tax Act, 1959 regarding the exemption of tamarind seed powder from tax liability.
Analysis:
The case involved a reference under section 61(1) of the Bombay Sales Tax Act, 1959, to determine the tax liability on the sale of tamarind seed powder under entry 12 of Schedule A. The Tribunal had to decide whether the sale of tamarind seed powder was covered by this entry and thus exempt from tax. The Commissioner of Sales Tax initially classified it under a different entry, but the Tribunal disagreed and held it to be covered by entry 12 of Schedule A, which includes chillies, chilly powder, tamarind, and turmeric. The key contention was whether tamarind seed powder should be considered part of the exemption based on the wording of the entry.
During the proceedings, arguments were presented regarding the interpretation of the entry. The applicant's counsel contended that for tamarind seed powder to qualify for exemption, it must involve the entire tamarind fruit, including its skin and seeds, being powdered and sold. However, the department and the Tribunal considered the possibility of even the pulp of the tamarind fruit being powdered, which the applicant disputed. The Tribunal's decision was based on the understanding that tamarind seeds or skin could be powdered, and therefore, the entry encompassed these parts of the fruit. The applicant relied on a Madras High Court decision regarding the distinction between tobacco and tobacco seeds, but the court found this analogy unsuitable for the tamarind seed powder exemption case.
In contrast, the respondents' counsel referred to a Kerala High Court decision related to the interpretation of tax rules on cashew kernel, suggesting that when a specific term like "tamarind" is used, its seeds should be included, especially when it is acknowledged that only the seeds or skin of tamarind can be powdered. Drawing parallels with the treatment of groundnut and cashew kernel under tax rules, the court concluded that the Tribunal was justified in its interpretation that tamarind seed powder fell under entry 12 of Schedule A. Therefore, the court answered the question in the affirmative, affirming the Tribunal's decision and directing the applicant to pay the costs of the reference.
This judgment clarifies the scope of the exemption for tamarind seed powder under the Bombay Sales Tax Act, emphasizing the interpretation of the relevant entry in Schedule A. The decision provides a detailed analysis of the arguments presented by both parties and references previous legal interpretations to support the conclusion reached by the court.
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1975 (2) TMI 103
Issues:
1. Interpretation of the term "resale" under section 2(26) of the Bombay Sales Tax Act, 1959.
2. Determination of whether hand-blending of lubricating oils amounts to "manufacture" under section 2(17) of the said Act.
The High Court of Bombay addressed a reference under section 61(1) of the Bombay Sales Tax Act, 1959, concerning the interpretation of the term "resale." The case involved a dealer in lubricating oil who hand-blended purchased oil and sold the resulting mixture. The Sales Tax Officer disallowed the deduction for the sales, stating it did not qualify as a resale. The Assistant Commissioner upheld this decision, emphasizing that hand-blending changed the oil's characteristics. However, the Sales Tax Tribunal reversed this decision, concluding that the hand-blending did not alter the goods significantly. The Tribunal found that the blended oil retained its original form and did not undergo a change that would amount to "manufacture" under the Act.
The question referred to the High Court was whether the Tribunal was justified in holding that hand-blending of lubricating oils did not change the form or character of the goods, thus qualifying as a resale. The Court examined the definition of "resale" under section 2(26) of the Act, which includes selling goods without altering their form or manufacturing them. The Court reiterated the requirement that an activity must result in a different commercial commodity to constitute "manufacture." Referring to a previous judgment, the Court emphasized that the essential character and properties of the goods must change for an activity to amount to manufacture.
Applying the legal test to the case, the Court found that the hand-blending process did not result in a new commercial commodity. The department failed to prove that a different product emerged from the blending process. The Court noted that the department did not argue before the Tribunal that a new commodity was created. Consequently, the Court rejected the argument that hand-blending constituted "manufacture" under section 2(17) of the Act. The Court held that the hand-blended oil retained its original form and did not undergo a substantial transformation, thus qualifying as a resale.
In conclusion, the High Court answered the reference in the affirmative, supporting the Tribunal's decision that hand-blending of lubricating oils did not amount to manufacture and qualified as a resale under the Bombay Sales Tax Act, 1959. As the respondent did not appear, no costs were awarded in the matter.
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1975 (2) TMI 102
Issues:
- Interpretation of the term "manufacture" under section 2(17) of the Bombay Sales Tax Act, 1959.
- Whether reconditioning old drums amounts to manufacturing.
- Applicability of section 10(1) of the said Act in determining liability for sales tax.
Analysis:
The judgment by the Bombay High Court underlines a reference concerning the interpretation of the term "manufacture" as per section 2(17) of the Bombay Sales Tax Act, 1959. The case involved respondents engaged in purchasing old drums, repairing them, and reselling the same. The Sales Tax Officer assessed them as manufacturers, leading to appeals up to the Sales Tax Tribunal, which ruled in favor of the respondents, stating that reconditioning old drums did not amount to manufacturing. The key issue was whether the repaired drums constituted a different commercial commodity from the old drums purchased. The court emphasized that for an activity to qualify as manufacturing, it must result in a commercially distinct commodity. The court referred to a previous decision highlighting that the test is whether the result is a different commodity, irrespective of the process involved. The court concluded that merely repairing old drums did not create a new commercial commodity, thus the respondents were not manufacturers under the Act.
In the judgment, the court addressed the argument presented by the counsel for the applicant, emphasizing that the term "manufacture" should be viewed in the context of a sales tax legislation primarily focused on taxing sales of goods. The court distinguished this fiscal legislation from social welfare legislation, highlighting the importance of interpreting terms within their specific legislative contexts. The court also differentiated the definition of "manufacturing process" under the Factories Act from that under the Sales Tax Act, indicating that activities like repairing were considered manufacturing processes under the former but not under the latter.
Furthermore, the court examined the relevance of section 10(1) of the Act in determining the liability for sales tax. The respondents contended that the repaired drums were different goods from the old drums purchased, allowing them to deduct the turnover of sales. However, the court rejected this argument, reiterating that the repaired drums did not constitute a different commercial commodity, thus the respondents were not entitled to such deductions. Ultimately, the court answered the reference in the affirmative, ruling in favor of the respondents and directing the applicant to bear the costs of the reference.
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1975 (2) TMI 101
Issues Involved:
1. Whether the ownership of the business was entirely transferred under section 26(1) of the Bombay Sales Tax Act, 1953.
2. Liability of the transferee to pay tax as per section 26(1) of the Act.
3. Interpretation of the deed of assignment concerning the transfer of business.
4. Applicability of precedents and principles from other cases and statutes.
Issue-wise Detailed Analysis:
1. Whether the ownership of the business was entirely transferred under section 26(1) of the Bombay Sales Tax Act, 1953:
The core issue revolves around whether the transfer of the business from the assignors to the assignee constituted an "entire transfer" as envisaged by section 26(1) of the Bombay Sales Tax Act, 1953. The Court noted that for a transferee to be liable under this section, the ownership of the business must be entirely transferred. The deed of assignment excluded debts, liabilities, credits, and outstandings, indicating that the ownership was not entirely transferred. The Court referenced the decision in Bherulal Maniklal Kothari v. State of Bombay, where it was held that the transfer of goodwill and trademarks alone does not constitute an entire business transfer. The Court concluded that the right to perform outstanding contracts and liabilities retained by the assignors indicated that the business was not entirely transferred.
2. Liability of the transferee to pay tax as per section 26(1) of the Act:
The respondents were assessed under section 14(6) and penalized under section 14(7) of the Act by the Sales Tax Officer, who considered them transferees under section 26(1). The Tribunal, however, found that since the ownership was not entirely transferred, the respondents were not liable as transferees. The Court upheld the Tribunal's view, emphasizing that the entire business, including liabilities and engagements, must be transferred to hold the transferee liable under section 26(1).
3. Interpretation of the deed of assignment concerning the transfer of business:
The Court analyzed clauses 1 and 4 of the deed of assignment. Clause 1 indicated a transfer of the business, goodwill, and tenancy rights but excluded debts, liabilities, credits, and outstandings. Clause 4 specified that the assignors retained the right and liability to perform all engagements up to the date of assignment. The Court interpreted these clauses to mean that the assignors retained significant elements of the business, thus preventing an entire transfer. The Court rejected the argument that "engagements" referred only to liabilities, noting that the term "liabilities" was separately addressed in the clause.
4. Applicability of precedents and principles from other cases and statutes:
The Court referred to several precedents to support its interpretation. In Tools and Machineries Ltd. v. State of Madras, it was held that retaining certain business assets negates an entire business transfer. The Court also cited Hajipur Plywood Factory v. State of Bihar, which required proving that the business was transferred as a running concern without substantial assets being retained by the transferor. The Court distinguished the present case from A.C.A. & I. Society v. Workmen and Commissioner of Income-tax v. K.H. Chambers, noting the differences in statutory context and the nature of the questions involved.
Conclusion:
The Court concluded that the ownership of the business was not entirely transferred to the respondents, and thus, they could not be held liable under section 26(1) of the Bombay Sales Tax Act, 1953. The question referred was answered in the affirmative, favoring the respondents. The applicant was ordered to pay costs in one reference, with no order as to costs in the other.
Reference answered in the affirmative.
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1975 (2) TMI 100
Issues Involved:
1. Whether ice-cream qualifies as "food".
2. Whether ice-cream can be considered "cooked food".
3. Whether the sales of ice-cream at the respondents' depots qualify for exemption under entry No. 14 of Schedule A to the Bombay Sales Tax Act, 1959.
Issue-wise Detailed Analysis:
1. Whether ice-cream qualifies as "food":
Mr. Parekh, representing the applicant, argued that ice-cream does not constitute "food" as it does not meet the criteria of being a substantive dish necessary for maintaining life and sustaining growth. He referred to definitions from Webster's Third New International Dictionary and the Shorter Oxford English Dictionary, which define "food" as material taken into the body to sustain growth and repair tissues, emphasizing the distinction between "food" and "drink".
However, the court observed that both dictionaries generally define "food" as something that can be eaten as opposed to something that can be drunk. Entry No. 14 of Schedule A also brackets "food" and "drink" together, indicating that "food" is used in its general sense. The court concluded that even if the term "food" were to be considered in terms of nutritive value, ice-cream, primarily made from milk, would fulfill this criterion due to its high calorie and vitamin content.
2. Whether ice-cream can be considered "cooked food":
Mr. Parekh's contention was twofold: first, that ice-cream is not cooked in ordinary parlance, as it is the result of freezing rather than cooking; and second, that "cooked food" refers to food consumed during regular meal hours. He relied on definitions of "to cook" from Webster's Third New International Dictionary and the Shorter Oxford English Dictionary, which involve preparing food by heating processes.
Mr. Patel, representing the respondents, argued that cooking involves any essential part of the preparation involving heat, even if the final product is not hot. The court examined the process of manufacturing Kwality Ice Cream, which involves boiling milk, adding sugar, and further boiling before cooling and freezing. The court referred to the Calcutta High Court's decision in Santosh Kumar Ghosh v. Commercial Tax Officer, which held that cooking includes preparation involving heat, even if other actions are involved.
The court found that the extensive application of heat in the preparation of ice-cream qualifies it as "cooked food". The Madhya Pradesh High Court's decision in Commissioner of Sales Tax, M.P., Indore v. Shri Ballabhdas Ishwardas, which equated "cooked food" with a "meal", was distinguished, as the entry in question did not mention a meal but rather "cooked food".
3. Whether the sales of ice-cream at the respondents' depots qualify for exemption under entry No. 14 of Schedule A to the Bombay Sales Tax Act, 1959:
Mr. Parekh argued that the exemption should apply only if the sales were made by an eating house, restaurant, hotel, refreshment room, or boarding establishment, which was not primarily a shop for selling sweetmeats, confectionery, cakes, biscuits, or pastries. He contended that the respondents' depots did not qualify as eating houses.
The court, however, referred to its earlier decision in Commissioner of Sales Tax v. Lala Lajpatrai Hotel, which held that it is irrelevant whether the food is consumed inside or outside the eating house. The Tribunal had found that ice-cream was sold for consumption at the depots, making them eating houses under the terms of the entry.
The court concluded that the interpretation sought by Mr. Parekh was unnecessary, as the depots met the criteria of being eating houses where ice-cream was sold for consumption. Therefore, the sales of ice-cream at the respondents' depots were covered by entry No. 14 of Schedule A and were exempt from tax.
Conclusion:
The court answered the question in the affirmative, holding that the Tribunal was justified in its interpretation, and awarded costs to the respondents. The reference was answered in the affirmative.
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1975 (2) TMI 99
Issues:
Interpretation of section 2(14) of the Bombay Sales Tax Act, 1953 regarding dock charges as part of sale price and cost of delivery.
Detailed Analysis:
1. Background and Facts: The case involved a reference under section 34(1) of the Bombay Sales Tax Act, 1953, where the respondent-assessee, a dealer of aerated waters, sold goods to shipping companies in Bombay docks and separately charged dock charges in the bills. The dispute arose regarding the treatment of these dock charges in the assessment for various periods.
2. Interpretation of Section 2(14): Section 2(14) of the Act defined 'sale price' to include any sum charged for activities done by the dealer before delivery, except for the cost of freight or delivery when separately charged. The Tribunal had already concluded that dock charges were part of the sale price, a finding not contested.
3. Cost of Delivery Argument: The respondent argued that dock charges constituted the cost of delivery, justifying their exclusion from taxable turnover. However, the court noted that even if dock charges were considered delivery costs, the respondent failed to prove a contractual right to charge these separately.
4. Requirement of Contractual Right: Citing precedents, the court emphasized the necessity of a contractual right to charge separate amounts. Without proof of a contractual agreement allowing for separate charges, the respondent could not claim a deduction based on the cost of delivery.
5. Comparison with Precedents: The court distinguished the case from precedents where bills evidenced contractual terms, highlighting the absence of written contracts in the present case. The absence of written contracts did not absolve the respondent from proving the existence of oral contracts allowing for separate charges.
6. Decision and Ruling: Ultimately, the court held that even if dock charges were deemed delivery costs, the respondent failed to establish a contractual right to charge these separately. Therefore, the Tribunal erred in excluding dock charges from the taxable turnover. The court ruled in favor of the applicant, directing the respondent to pay the costs of the reference.
7. Conclusion: The judgment clarified the importance of contractual rights in charging separate amounts and upheld the requirement for clear evidence of such agreements to support claims for deductions based on delivery costs. The decision emphasized the need for substantiating contractual terms, whether written or oral, to justify the exclusion of specific charges from taxable turnover under the Act.
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1975 (2) TMI 98
The petitioner, a dealer in dyes, sought a declaration to pay sales tax at 4% instead of 8% between April 1, 1974, and July 1, 1974. The High Court ruled that the legislative declaration of 8% prevailed over the earlier notification of 4%, dismissing the petition.
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1975 (2) TMI 97
Issues Involved:
1. Whether the oil-tank sold by the respondent falls within entry No. 58 of Schedule C to the Bombay Sales Tax Act, 1959.
2. Whether the oil-tank is a component part of a motor vehicle.
3. Whether the oil-tank is an article adapted for use as parts and accessories of motor vehicles.
4. The relevance of the terms of the contract between the parties in determining the tax entry.
Summary:
Issue 1: Classification of the Oil-Tank
The primary issue was whether the oil-tank sold by the respondent fell within entry No. 58 of Schedule C to the Bombay Sales Tax Act, 1959. The Tribunal concluded that the oil-tank did not fall under this entry but rather under entry No. 22 of Schedule E, which is the residuary entry.
Issue 2: Component Part of a Motor Vehicle
The Commissioner of Sales Tax initially held that the oil-tank was a component part of a motor vehicle, thus attracting a higher tax rate u/s 58(2) of Schedule C. However, the Tribunal found that the oil-tank had an independent existence and could be used for purposes other than being mounted on a motor vehicle chassis. The High Court agreed with the Tribunal, stating that the oil-tank was not a component part of a motor vehicle as it retained its individuality and was easily detachable.
Issue 3: Article Adapted for Use as Parts and Accessories
The alternative argument was whether the oil-tank fell under the second part of sub-entry (2) of entry No. 58, which includes articles adapted for use as parts and accessories of motor vehicles. The Tribunal found that the oil-tank was ordinarily used for purposes other than being mounted on a motor vehicle chassis. The High Court upheld this finding, stating that the oil-tank did not meet the condition of being used exclusively as a motor vehicle part or accessory.
Issue 4: Terms of the Contract
The respondents argued that the terms of the contract should determine the tax entry. The High Court rejected this argument, stating that it is the nature, character, and ordinary use of the goods that determine the applicable tax entry, not the contractual terms between the parties.
Conclusion:
The High Court answered the question in the affirmative, agreeing with the Tribunal's conclusion that the oil-tank did not fall within entry No. 58 of Schedule C but rather under entry No. 22 of Schedule E. The applicant was ordered to pay the costs of the reference.
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1975 (2) TMI 96
Issues:
Interpretation of the term "glassware" in the context of sales tax law.
Analysis:
The judgment by the Bombay High Court involved a reference under section 61(1) of the Bombay Sales Tax Act, 1959, regarding the classification of glass sheets sold by respondents. The Commissioner of Sales Tax initially classified the glass sheets under entry No. 14 of Schedule C, while the Tribunal later determined that they should be classified under entry No. 22 of Schedule E. The main issue revolved around whether the term "glassware" in the statute included glass sheets or not.
The Court analyzed previous case law and emphasized that the interpretation of terms in sales tax statutes should consider the meaning ascribed in trade parlance or common trade understanding. Referring to the decision in Tribuwandas Gulabchand & Bros. v. State of Maharashtra, the Court highlighted that the determination of whether glass sheets fall under "glassware" is a question of fact based on evidence. In this case, evidence presented to the Tribunal indicated that in trade parlance, glass sheets were not considered as part of "glassware."
The Court further cited Commissioner of Sales Tax v. Jaswant Singh Charan Singh, emphasizing that ordinary terms in sales tax statutes should be interpreted based on common understanding in trade. The principle that dictionary meanings should not override trade understanding was reiterated, as seen in Commissioner of Sales Tax v. S.N. Brothers. Ultimately, the Court held that the Tribunal's decision, based on evidence of trade understanding, was correct. Therefore, the glass sheets sold by the respondents were classified under entry No. 22 of Schedule E, and the reference was answered in the affirmative.
In conclusion, the judgment provides a detailed analysis of the interpretation of the term "glassware" in the context of sales tax law, emphasizing the importance of trade parlance and common understanding in determining the classification of goods. The decision underscores the need to consider the practical understanding of terms in commercial transactions while interpreting sales tax statutes.
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1975 (2) TMI 95
Issues Involved:
1. Constitutionality and validity of Rule 45(3)(b) of the Andhra Pradesh General Sales Tax Rules.
2. Jurisdiction and legality of the impugned notices issued by the assessing authority.
Issue-Wise Detailed Analysis:
1. Constitutionality and Validity of Rule 45(3)(b) of the Andhra Pradesh General Sales Tax Rules:
The petitioners argued that Rule 45(3)(b) is unconstitutional and invalid. They contended that the rule is unreasonable, arbitrary, and discriminatory as it applies to all dealers, registered or otherwise, and contravenes Section 25 of the Andhra Pradesh General Sales Tax Act, which requires only registered dealers to maintain accounts. However, the court held that Section 39(2)(g) of the Act empowers the State Government to make rules for the issue of bills or cash memoranda and the particulars to be shown therein. The court found that Rule 45(3)(b) is valid and reasonable, providing one method of proof for the first sale of goods liable to a single point tax. The rule does not contravene Section 25, as it is applicable to all dealers, including unregistered ones, and is not discriminatory.
2. Jurisdiction and Legality of the Impugned Notices:
The petitioners claimed that the impugned notices issued by the assessing authority were without jurisdiction, illegal, and violative of the principles of natural justice. They argued that the mere non-production of a certificate as required by Rule 45(3)(b) should not ipso facto disentitle them from claiming exemption. The court agreed with the petitioners, stating that the onus is on the petitioners to establish that the disputed transactions are second sales of jaggery within the State. The court emphasized that the assessing authority must afford a fair and reasonable opportunity to the dealers to prove their case by any evidence, oral or documentary. The court concluded that the assessing authority's insistence on the production of bills or cash memoranda containing the certificate required under Rule 45(3)(b) was not the only mode of proof and that other methods of proving the fact that the sales in question are second sales should be considered.
The court also addressed the respondent's argument that the writ petitions were premature and that the petitioners could raise their pleas before the assessing authority. The court found this argument devoid of merit, noting that the impugned notices indicated that the assessing authority had already concluded that without the production of the required documents, the turnovers must be taxed. This view was deemed illegal and erroneous.
Conclusion:
The court quashed the impugned notices as they were illegal and violative of the principles of natural justice. The assessing authority was directed to determine afresh whether the disputed transactions are second sales of jaggery within the State, after affording reasonable opportunity to the petitioner-dealers to establish their plea by any evidence, oral or documentary. The writ petitions were allowed, but no order as to costs was made. Advocate's fee was set at Rs. 75 in each case. Petitions allowed.
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1975 (2) TMI 94
Issues Involved:
1. Validity of the public auction sale conducted by the Commercial Tax Officer.
2. Applicability of Section 42 of the Tamil Nadu Revenue Recovery Act.
3. Rights of the fourth defendant as a purchaser in the public auction.
4. Impact of the mortgage on the suit property.
Issue-Wise Detailed Analysis:
1. Validity of the Public Auction Sale Conducted by the Commercial Tax Officer:
The plaintiffs, as mortgagees, initiated action based on a mortgage deed dated 27th September 1957 (Exhibit A-1), seeking sale of the suit property not released under Exhibit A-2. They contended that the public auction held by the Commercial Tax Officer on 28th December 1965, where the fourth defendant purchased the property, did not bind them. The plaintiffs argued that their mortgage rights were unaffected by this auction as the mortgage was prior to the auction. The fourth defendant claimed unawareness of any encumbrance and relied on the auction notice stating the property was sold free of encumbrances.
2. Applicability of Section 42 of the Tamil Nadu Revenue Recovery Act:
The fourth defendant argued that the sale conducted under the Central Sales Tax Act and Tamil Nadu General Sales Tax Act should be deemed free of all encumbrances per Section 42 of the Tamil Nadu Revenue Recovery Act. Section 42 states that lands sold for arrears of revenue shall be sold free of all encumbrances. The court examined whether this provision applied to sales conducted for recovery of tax arrears.
3. Rights of the Fourth Defendant as a Purchaser in the Public Auction:
The fourth defendant contended that the sale should be free from all encumbrances, making his title to the property unimpeachable. The court reviewed the statutory provisions and relevant case law to determine whether the sale of the property for tax arrears could extinguish prior encumbrances such as the plaintiffs' mortgage.
4. Impact of the Mortgage on the Suit Property:
The court analyzed the provisions of the Central Sales Tax Act, Tamil Nadu General Sales Tax Act, and the Tamil Nadu Revenue Recovery Act. Section 9(2) of the Central Sales Tax Act allows state authorities to collect taxes as per state laws. Section 24(2) of the Tamil Nadu General Sales Tax Act permits recovery of tax dues as arrears of land revenue. Section 29 grants Commercial Tax Officers powers akin to Collectors under the Revenue Recovery Act. However, the court noted a distinction in the statutory language: taxes recoverable "as if" they were arrears of land revenue do not equate to actual land revenue, thus not automatically freeing the property from prior encumbrances.
Conclusion:
The court concluded that the sale conducted by the Commercial Tax Officer did not pass the property free of prior encumbrances, including the plaintiffs' mortgage. The reasoning was supported by precedents, including Ramachandra v. Pitchaikanni and Ibrahim Khan Sahib v. Rangaswami Naicken, which held that sales for tax arrears recoverable "as if" they were land revenue do not extinguish prior encumbrances. The court upheld the plaintiffs' mortgage rights, affirming the trial court's mortgage decree. The appeal by the fourth defendant was dismissed, with no order as to costs. The court appreciated the assistance of the learned Additional Government Pleader.
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1975 (2) TMI 93
Issues:
1. Revision of assessment under Central Sales Tax Act post amendment.
2. Jurisdiction of Deputy Commissioner in revising the assessment order.
3. Contention of reassessment or fresh assessment by Deputy Commissioner.
4. Deductions permissible under section 8A of the Central Sales Tax Act.
Analysis:
The case involved tax revision cases where the petitioners, registered dealers in paddy and rice, challenged the assessment of turnover under the Central Sales Tax Act for the year 1964-65. The assessment included sales of paddy in inter-State trade. Initially, the assessment was set aside by the Assistant Commissioner based on a Supreme Court judgment. However, post an amendment to the Central Sales Tax Act in 1969, the Deputy Commissioner revised the assessment, restoring the original order and denying relief granted earlier. The petitioners contended that the Deputy Commissioner exceeded his jurisdiction by revising the assessment. The Tribunal held that the revision was within the powers conferred by the Act and Central Sales Tax Act, rejecting the petitioners' objections.
The first contention raised by the petitioners was that the Deputy Commissioner's order amounted to reassessment or fresh assessment. The Court dismissed this argument, stating that the Deputy Commissioner exercised revisional power under section 20(2) of the Act. The revision did not involve a fresh assessment but merely rectified the appellate order based on the amended law, restoring the original assessment. It was clarified that there was no determination of turnover afresh by the Deputy Commissioner.
The second contention focused on the deductions permissible under section 8A of the Central Sales Tax Act. The petitioners argued that the Deputy Commissioner's order did not allow these deductions, making it illegal. However, the Court explained that the deductions under section 8A were already applicable under rule 11(2) of the Central Sales Tax Rules at the time of the original assessment. The amendment merely incorporated these deductions into the Act. The Court directed the assessing authority to determine the taxable turnover considering the deductions under section 8A, leaving the decision on entitlement to deductions to the assessing authority.
In conclusion, the Court dismissed the revision cases, upholding the Deputy Commissioner's revision of the assessment post-amendment. The petitioners' contentions regarding reassessment and deductions permissible under section 8A were addressed, with the Court clarifying the legal aspects and directing the assessing authority to consider the deductions during reassessment.
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