Turnover exclusion on approval sales upheld in principle, while factual use findings did not raise a substantial question of law.

A factual finding that goods were used in generating or distributing electrical energy did not, by itself, raise a substantial question of law, so exclusion of the sale price of tools and similar articles from turnover was not justified on that ground. By contrast, goods supplied on approval and later returned unapproved were governed by Section 24 of the Sale of Goods Act, and that principle supported exclusion from turnover even if the relevant local rule was not then in force. The claim succeeded in principle, but the exact exclusion had to be recalculated transaction by transaction, and the matter was remanded for limited reconsideration.

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Issues: (i) Whether the question relating to exclusion of the sale price of tools and other articles from turnover was a substantial question of law. (ii) Whether the sale price of goods supplied on approval and returned unapproved was liable to be excluded from turnover.

Issue (i): The issue turned on whether the finding that the goods were used in the generation or distribution of electrical energy raised a question of law capable of revision. The determination depended on the factual use of the goods, and such a finding was not treated as a question of law or a substantial question of law.

Conclusion: The revision failed on this issue.

Issue (ii): The sale of goods supplied on approval was governed by the principles embodied in Section 24 of the Sale of Goods Act and reflected in Rule 5(iv) of the rules made under the Act. Even where Rule 5(iv) was not in force for the relevant period, Section 24 applied to transactions of this nature, so the turnover exclusion claim was legally sustainable. The exact amount, however, required examination of individual transactions.

Conclusion: The claim succeeded in principle and the matter was remanded to the Commissioner to determine the exact amount eligible for exclusion.

Final Conclusion: The application succeeded only on the second ground and the assessment was sent back for limited reconsideration of the turnover attributable to approval sales.

Ratio Decidendi: A factual finding on the use of goods does not, by itself, raise a substantial question of law, and transactions of goods supplied on approval are governed by the statutory principles of sale on approval even where the local rule was not then in force.

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