1955 (3) TMI 20 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Deduction under Rule 18(2) of the Madras General Sales Tax (Turnover and Assessment) Rules.
2. Exemption under Article 286(1)(a) of the Constitution for sales outside the State.
3. Jurisdiction and powers of the Sales Tax Appellate Tribunal under Section 12-A of the General Sales Tax Act.

Issue-wise Detailed Analysis:

1. Deduction under Rule 18(2) of the Madras General Sales Tax (Turnover and Assessment) Rules:
The assessees, engaged in the manufacture and sale of groundnut oil and cakes, claimed a deduction under Rule 18(2) for the purchase price of groundnuts converted into oil and cakes. The Deputy Commercial Tax Officer allowed a deduction of Rs. 22,95,670 under Rule 18(2). However, the Commercial Tax Officer, Salem, held that the assessees could not claim both the deduction under Rule 18(2) and the exemption under Article 286(1)(a) simultaneously. This view was affirmed by the Sales Tax Appellate Tribunal, which held that the assessees were entitled to the constitutional exemption but not the deduction under Rule 18(2) if the sales were outside the State.

2. Exemption under Article 286(1)(a) of the Constitution for sales outside the State:
The assessees claimed an exemption for sales amounting to Rs. 20,07,731-2-0, arguing that these sales were outside the State and thus exempt under Article 286(1)(a) of the Constitution. The Deputy Commercial Tax Officer allowed a deduction of Rs. 1,00,685-4-6 for sales through commission agents in Bombay but disallowed the rest. The Commercial Tax Officer also denied the exemption, stating that granting both the deduction under Rule 18(2) and the exemption under Article 286(1)(a) would result in undue relief. The Tribunal, however, held that the assessees were entitled to the constitutional exemption, necessitating a reassessment.

3. Jurisdiction and powers of the Sales Tax Appellate Tribunal under Section 12-A of the General Sales Tax Act:
The Tribunal's jurisdiction to remand the case for reassessment was challenged. The Tribunal had directed the Commercial Tax Officer to reassess the turnover, excluding sales outside the State but not allowing the deduction under Rule 18(2). The High Court analyzed Section 12-A, especially sub-sections (4) and (5), concluding that the Tribunal had the authority to pass such orders. The proviso to sub-section (5) indicated that an order by the Tribunal could result in an enhanced assessment. The Court held that the Tribunal's order was within its jurisdiction and proper, as the issues of deduction and exemption were interrelated and could not be separately adjudicated.

Conclusion:
The High Court upheld the Tribunal's decision, confirming that the assessees could not claim both the deduction under Rule 18(2) and the exemption under Article 286(1)(a). The Tribunal's order to remand the case for reassessment was deemed within its jurisdiction, and the revision petition was dismissed with costs.