Resale turnover under concessional purchases cannot be included for additional sales tax, and related penalty falls with it.

The Madras HC considered whether resale turnover from polythene granules purchased under Form XVII could be treated as taxable turnover for additional sales tax. It distinguished purchases made for manufacturing use from the portion later resold, applying the separation between Section 3(3) and Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. The resale component was not liable to be included in taxable turnover for additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1979, so the levy was unsustainable to that extent. The penalty based on the same computation also could not stand and was set aside.

---

---

Issues: Whether the turnover representing the resale of polythene granules purchased under Form XVII could be included in the assessee's taxable turnover for levy of additional sales tax and taxed at 1%, and whether the consequential penalty could stand.

Analysis: The turnover in question arose from purchases made on a concessional basis for manufacturing use. The materials on record and the respondent's own stand showed that a portion of the purchases was resold and not used for manufacture. The Court applied the distinction between turnover liable under Section 3(3) and turnover falling under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959, and held that the resale component could not be treated as the assessee's taxable turnover for the purpose of additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1979. The levy of additional sales tax was therefore unsustainable to that extent, and the penalty founded on the same computation could not survive.

Conclusion: The inclusion of the resale turnover for levy of additional sales tax at 1% was held impermissible, and the consequential penalty was also set aside.

---