1973 (5) TMI 89 - HC - VAT and Sales Tax

Court rules in favor of assessee in tax case on disputed turnovers related to forest produce sales

Dhanalakshmi & Co. Versus The State of Madras

The court ruled in favor of the assessee in a tax case involving disputed turnovers related to the sale price of forest produce and bamboos. It held that ... - Issues:1. Disputed turnovers involving the sale price of forest produce and bamboos supplied by the assessee.2. Assessment of suppressed turnover in sales of forest produce.3. Assessment of sales of bamboos to a specific company.Analysis:1. The judgment addressed two main disputed turnovers: the sale price of forest produce and the sale price of bamboos supplied by the assessee to a specific company. The assessee, a forest contractor, had taken leases of bamboo coupes and was required to deliver a specific quantity of bamboos to the company as per the lease terms. The assessing authority assumed that supplying bamboos from the assessee's godown to the company constituted a sale, leading to the disputed turnover of Rs. 37,314.05. The court disagreed, stating that the delivery was in fulfillment of the lease terms, not a sale, and set aside the assessment on this turnover.2. The assessment of suppressed turnover in sales of forest produce was also challenged. The authorities had estimated the turnover at five times the lease amounts paid by the assessee due to discrepancies between the quantity of forest produce sold and the lease amounts. The court noted that the authorities did not consider the closing stock of forest produce in the assessee's possession at the year-end. The court directed the Tribunal to reevaluate the turnover by accounting for the closing stock to accurately correlate the quantity of forest produce collected with the lease payments.3. The court highlighted that the delivery of bamboos to the company was not a sale but a fulfillment of contractual obligations. Despite the delivery being from the assessee's godown, it did not change the nature of the transaction. The court set aside the assessment on this turnover of Rs. 37,314.05. The Tribunal was directed to reconsider the assessment of suppressed turnover in sales of forest produce by accounting for the closing stock to ensure a proper correlation with lease payments. The judgment partly allowed the tax case, with no order as to costs, and allowed both parties to present additional evidence if needed.