Case: Daffadar Bhagat Singh and Sons Vs. Joint Excise and Taxation Commissioner, Punjab, Patiala and Another

2. The question arises on the following facts : The appellants are a firm of army contractors, registered as a dealer under the Act as also under the Central Sales Tax Act. Under the contract between them and the army authorities, they had to supply, among other things, meat and meat on hoof. Under section 6 read with entry No. 18 of Schedule B to the Act no tax is payable on the sale of meat, fish and eggs except when sold in tins, bottles or cartons. For the yearthe appellants were assessed on the returns filed by them, and the sale of meat to the army, whether in dressed form or as meat on hoof, was not taxed. Subsequently, the Joint Excise and Taxation Commissioner, Punjab, Patiala, issued notices to the appellants seeking to reopen the assessment under section 21 and imposed penalty on the appellants under section 10(7) of the Act. According to the Commissioner, "meat on hoof" was an army term for goat and sheep and was taxable and did not come under entry No. 18 of Schedule B. The appellants filed a writ petition in the High Court of Punjab and Haryana for quashing the said notices. A learned single Judge of the High Court dismissed the writ petition, and on appeal a Division Bench affirmed the order of dismissal.

Court's reasoning:
The trail court negatived both the contentions. As the first contention raised in the High Court was given up before us by Mr. S. T. Desai appearing for the appellants, we are concerned only with the other contention that what was sold under the contract was meat, not live animals.We find it difficult to appreciate the view taken by the learned single Judge which has been affirmed by the Division Bench that "meat on hoof is preserved meat, the preservation being the natural carton consisting of the skin of the animal". The skin covering the flesh of the animal preserves its life; to think that the skin is a carton for the flesh, which can be used for food after the animal is slaughtered, in our opinion, goes against commonsense. Counsel for the respondents submitted that "meat on hoof" in army vocabulary meant the live animal. Whether what was sold by the appellants to the army authorities as meat on hoof was really meat, or it was live animals that were sold, would depend on a correct reading of the contract between the parties. The contract was not annexed to the writ petition and the Division Bench of the High Court has observed that it was not shown to the learned Judges at the hearing of the appeal; it is however not clear whether the learned Judges asked for a copy of the contract which the appellants failed to produced. On behalf of the appellants extracts from the contract were handed over to us, but the counsel for the respondents seemed to think that there were other terms in the contract regarding skins, for instance, which have a bearing on what was sold. We are, therefore, not in a position to decided for ourselves what exactly was the contract between the parties. In a way the respondents are also responsible for this state of affairs having taken up the stand in thefiled in the High Court that the terms of the contract were not relevant. As we feel that the question can be answered only on a proper appreciation of the terms of the agreement between the appellants and the army authorities, the case must go back to the High Court for disposal of the matter according to law on a consideration of the relevant contract; the appellants will file copy of the contract, supported by an affidavit, before the hearing of the matter in the High Court.