Case: State of Madras Vs. V. P. S. A. Narayana Nadar and Company

1. The respondent (hereinafter referred to as the "assessee") is a dealer in various commodities including coffee powder at Theni, Madurai District. For the assessment year0 the Commercial Tax Officer assessed him on a taxable turnover of Rs. 17, 40, 960.52 P. under the Madras General Sales Tax Act, 1959 (hereinafter referred to as the "Act") at various rates. His turnover in respect of French coffee sales was Rs. 50, 848.28 P. Out of this amount it was the case of the assessee that the local sales were Rs. 41, 154.32 P. and outside sales were Rs. 9, 693.93 P. The assessee further contended that the local sales of French coffee were made from his local purchases of coffee seeds amounting to Rs. 57, 952.22 P. and that outside sales of French coffee seeds came out of his outside purchases of coffee seeds amounting to Rs. 26, 581.22 P. The Commercial Tax Officer (Assessments), Madurai, assessed him on the turnover of Rs. 28, 817.46 P. at 5 per cent. single point holding that it represented first sales of coffee powder in the State. The assessee preferred an appeal to the Appellate Assistant Commissioner of Commercial Taxes and contended that he was not the last purchaser in the State and that he was not liable to pay tax on French coffee turnover of Rs. 28, 817.46 P. coming under item 33 of the First Schedule to the Act, as the coffee portion of the French coffee had already suffered tax in the State under item 32. The Appellate Assistant Commissioner found that the assessing officer had assessed on some proportion adopted by him with reference to his purchases made from outside the State. The Appellate Assistant Commissioner remanded the matter to the Commercial Tax Officer (Assessments) for a fresh assessment. The assessee took the matter in further appeal to the Sales Tax Appellate Tribunal which held that this item of turnover should be deleted from the taxable turnover in view of the decision of the Madras High Court in S. Rathinaswamy Chettiar v. The State of Madras ([1962] 13 S.T.C. 419). The State of Madras moved the High Court in revision but the revision petition was dismissed by the High Court in limine on 16th April, 1964, in Tax Case No. 84 of 1964.Section 3(2) of the Act states as follows :"Notwithstanding anything contained inn (1) in the case of goods mentioned in the First Schedule, tax under this Act shall be payable by a dealer, at the rate and only at the point specified therein on the turnover in each year relating to such goods whatever be the quantum of turnover in that year."

Reasoning: In our opinion, the argument on behalf of the appellant isd and must be accepted as correct. The earlier decision of the Madras High Court in S. Rathinaswamy Chettiar v. The State of Madras ([1962] 13 S.T.C. 419) requires to be reconsidered in view of the statutory provisions of the new Act, i.e., The Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959). We consider therefore that the judgment of the Madras High Court should be set aside and the case should be remanded. But it is also necessary, in this case, to set aside the order of the Appellate Tribunal dated May 15, 1963, so far as it concerns the turnover of the assessee relating to French coffee. There is no clear finding by the Appellate Tribunal how much coffee portion of the French coffee has already suffered tax in the State under item 32 and the language of the order of the Appellate Tribunal with regard to they of French coffee under item 33 is obscure.For these reasons we hold that this appeal should be allowed. The order of the Madras High Court dated April 16, 1964, in Tax Case No. 84 of 1964 is set aside as also the order of the Sales Tax Appellate Tribunal dated May 15, 1963, in Appeal No. 425 of 1962, and the case is remanded to the Sales Tax Appellate Tribunal for hearing the appeal afresh and determining it in accordance with law.