1977 (10) TMI 102 - HC - VAT and Sales Tax

High Court clarifies sales tax assessment for 1970-71, allows new points. Tax not part of goods' price. Exemption on zinc sulfate sales reversed.

The State of Tamil Nadu Versus Shaw Wallace and Company

The State of Tamil Nadu Versus Shaw Wallace and Company - [1979] 43 STC 48 (Mad) Issues:Sales tax assessments for the years 1970-71 and 1969-70, errors in allowing deductions, interpretation of sales tax collection, application of tax laws in determining turnover, exemption on sale of zinc sulphate under item 21 of the First Schedule.Analysis:The High Court of Madras addressed two tax revision cases concerning sales tax assessments for the years 1970-71 and 1969-70. The main issues raised were whether the Sales Tax Appellate Tribunal erred in allowing the assessee to claim deductions for sales tax collected along with the price, and whether the total amount collected should be considered as the price of goods sold if invoices did not separately indicate tax payable. The Court clarified that the Tribunal has the discretion to allow new points to be raised, even if not raised before lower authorities, and such exercise of discretion does not amount to a legal error justifying revision under the Sales Tax Act.Regarding the interpretation of sales tax collection, the Court referred to a Supreme Court decision and emphasized that when the statute permits tax collection by the assessee, the amount collected cannot be considered part of the price of goods. In this case, the Court found that the tax collected was distinct from the price of goods, as indicated by the price fixation and the clear identification of the tax amount. Therefore, the Court upheld the Tribunal's decision on this issue.An additional point arose in one case concerning the sale of zinc sulphate and an exemption granted based on item 21 of the First Schedule. The Court analyzed the wording of item 21, which dealt with chemical fertilizers, and considered whether the exemption was correctly applied. Citing a Supreme Court decision, the Court concluded that item 21 should be interpreted as a definition, not an exhaustive list, leading to the reversal of the exemption granted on the turnover of zinc sulphate. The Court directed the turnover to be adjusted accordingly.In conclusion, the High Court of Madras disposed of the tax revision cases, directing the parties to bear their costs and providing detailed reasoning for each issue addressed, including the interpretation of tax laws, deductions, and exemptions under the Sales Tax Act.