Canteen turnover proof and deemed sale by right to use goods turned on records and contract terms.

Canteen sales could not be excluded from taxable turnover because the assessee failed to produce records showing the extent of tax-free or first-point tax-paid goods, so the revenue estimate was upheld as not arbitrary. Hire charges for machinery required fresh examination because deemed sale depends on the contract terms and whether effective control, possession, and the right to use the goods had passed to the users; the incomplete record prevented a final determination, so the matter was remanded for reconsideration on the complete agreement and supporting materials.

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Issues: (i) Whether canteen sales could be excluded from taxable turnover on the basis that they included tax-free goods and first-point tax-paid goods. (ii) Whether hire charges received for machinery supplied to contractors and other departments constituted deemed sales by transfer of the right to use goods.

Issue (i): Whether canteen sales could be excluded from taxable turnover on the basis that they included tax-free goods and first-point tax-paid goods.

Analysis: The record showed that the assessee failed to produce detailed accounts or materials to establish the extent to which canteen sales related to tax-free or first-point tax-paid goods. In the absence of such material, the estimate made by the assessing authority and sustained by the appellate forums could not be said to be arbitrary, and a remand would serve no useful purpose.

Conclusion: The issue was answered against the assessee and in favour of the Department.

Issue (ii): Whether hire charges received for machinery supplied to contractors and other departments constituted deemed sales by transfer of the right to use goods.

Analysis: The decisive question was the terms of the contract governing use of the machinery and whether effective control, possession, and the right to enjoy the goods had passed to the users. The existing record was incomplete, and the assessee stated that it was ready to produce the full contract. Since the transaction could fall either within or outside deemed sale depending on the contractual terms and the extent of retained control, a fresh examination of the complete agreement and supporting documents was necessary.

Conclusion: The issue was not conclusively decided and was remanded to the assessing authority for fresh determination.

Final Conclusion: The challenge succeeded only in part: the canteen turnover issue was rejected, while the machinery hire-charge issues were sent back for reconsideration on the basis of the complete contract and relevant materials.

Ratio Decidendi: Where the assessee fails to furnish material records necessary to segregate taxable and non-taxable turnover, the revenue estimate will not be treated as arbitrary; and whether machinery hire charges amount to deemed sale depends on the contractual terms and the extent of transfer of effective control and the right to use the goods.

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