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1975 Supreme(Mad) 265
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE V RAMASWAMY & THE HONOURABLE MR. JUSTICE V SETHURAMAN
State of Tamil Nadu, Represented By The Deputy Commissioner (Ct) - Appellant
Versus
Thiruvalargal Voltas Limited - Respondent
Case No : TC No. 265/71, Revision No. 164 of 1971
Decided On : 10 April 1975
The payment of excise duty under the Medicinal and Toilet Preparations (ED) Act, 1955, does not make the goods exempt from the tax under S. 8 r/w item 3 of Third Schedule to the Tamil Nadu General ST Act, 1959.
Headnote:
TAMIL NADU GENERAL SALES TAX ACT, 1959 - S. 8, THIRD SCHEDULE, ITEM 3 - EXEMPTION - MEDICINAL PREPARATIONS CONTAINING ALCOHOL - PAYMENT OF EXCISE DUTY - SALES TAX PAID IN ANOTHER STATE - EXCLUSION FROM TAXABLE TURNOVER - PRICE CONTROL ORDER - SALE PRICE OF TRACTORS.
Fact of the Case:
The assessee claimed exemption from sales tax on the sale of medicinal preparations containing alcohol under S. 8 r/w item 3 of the Third Schedule to the Tamil Nadu General ST Act, 1959. The assessee also claimed exclusion from the taxable turnover of a sum representing the Bombay Sales-tax paid in Maharashtra State on their purchase of tractors.
Finding of the Court:
The court held that the assessee was not entitled to exemption from sales tax on the sale of medicinal preparations containing alcohol because the excise duty was not paid in Tamil Nadu and the payment of duty under the Medicinal and Toilet Preparations (ED) Act, 1955, did not make the goods exempt from the tax under S. 8 r/w item 3 of Third Schedule. The court also held that the sales tax paid by the assessee to the Maharashtra Government on the purchase of tractors was not liable to be included in the taxable turnover of the assessee because the Price Control Order prohibited the dealer from selling the tractor at a price exceeding the sales price fixed by the Government of India.
Issues: 1. Whether the assessee was entitled to exemption from sales tax on the sale of medicinal preparations containing alcohol under S. 8 r/w item 3 of the Third Schedule to the Tamil Nadu General ST Act, 1959? 2. Whether the sales tax paid by the assessee to the Maharashtra Government on the purchase of tractors was liable to be included in the taxable turnover of the assessee?
Ratio Decidendi: 1. The court held that the assessee was not entitled to exemption from sales tax on the sale of medicinal preparations containing alcohol because the excise duty was not paid in Tamil Nadu and the payment of duty under the Medicinal and Toilet Preparations (ED) Act, 1955, did not make the goods exempt from the tax under S. 8 r/w item 3 of Third Schedule. 2. The court held that the sales tax paid by the assessee to the Maharashtra Government on the purchase of tractors was not liable to be included in the taxable turnover of the assessee because the Price Control Order prohibited the dealer from selling the tractor at a price exceeding the sales price fixed by the Government of India.
Final Decision: The court partly allowed the revision petition filed by the Revenue and set aside the order of the Tribunal in so far as it related to the turnover of Rs. 45, 325-77 related to the sale of the medicinal and toilet preparations. The court confirmed the order of the Tribunal in other respects.
V. RAMASWAMI, J.
In this revision, two points are involved. One is the right of the assessee to claim exemption on a turnover of Rs. 45, 325-77 relating to the sale of medicinal preparations containing alcohol under S. 8 r/w item 3 of the Third Schedule to the Tamil Nadu General ST Act, 1959 (hereinafter referred to as 'the Act'). The other is the claim of exclusion from the taxable turnover of a sum of Rs. 33, 360/-, representing the Bombay Sales-tax paid in Maharashtra State by the assessee on their purchase of the tractors. For the asst. yr. 1966-67, the respondent assessee submitted a total taxable turnover of Rs. 4, 18, 58, 543.98 and Rs. 2, 68, 03, 833.90 respectively. He had claimed exemption to an extent of Rs. 4, 97, 450.74 on the ground that they represented sales of medicinal preparations containing alcohol and, therefore, they are exempt. The AAC gave a relief except to an extent of Rs. 45, 325.77. The rejection in respect of this amount was on the ground that there was no proof of payment of excise duty on this sum of Rs. 45, 325.77 on the entire quantity, and not merely on the ingredients. When this matter came up before the Tribunal the assessee produced evidence to show that they have paid excise duty under the Medicinal and Toilet Preparations (ED) Act, 1955 on their entire quantity. Therefore, the Tribunal allowed this sum of Rs. 45, 325.77 also.
2. It is seen from the evidence that the assessee had paid duty under the Medicinal and Toilet Preparations (ED) Act, 1955, in the State of Maharashtra. We have held today T. C. 65 of 1973 etc. 1976 CTR(Mad) 1 & T. C. No. 120 of 1970 etc. that such goods are not liable for exemption under S. 8, both on the ground that the duty is not paid in this State and also on the ground that the payment of duty under the Medicinal and Toilet Preparations (ED) Act, 1955, does not make the goods exempt from the tax under S. 8 r/w item 3 of Third Schedule. Therefore, the revision petition filed by the Revenue so far as it related to the exemption of Rs. 45, 325-77 has to be allowed.
3. The other point related to the amount of sales tax paid by the assessee in Maharashtra State on the purchase of tractors. The respondent-assessees purchased tractors in Maharashtra and brought them to this State and sold them to various persons. The sale of tractors in governed by the Price Control Order, notified by the Government of India under the Essential Commodities Act, 1955. Under that Order, a dealer cannot sell the tractors exceeding the sale price fixed under cl. 4 of that Order. "Sale price" is defined as meaning of the amount payable to a manufacturer or dealer as consideration for the sale of tractor inclusive of any charges for cost of freight or delivery, but exclusive of any sum charged as tax on the tractor as a finished product. In exercise of the power under cl.4, the Government of India fixed the price of tractors at Rs. 20, 900/- each. While selling these tractors to the various persons in this State, the assessee charged the sale price of Rs. 20, 900/- for each of these tractors and added to this money the sales tax paid by them to the Maharashtra Government and the sales-tax payable under the Tamil Nadu General ST Act separately. The assessing authority wanted to include the sales-tax paid to the Maharashtra Government by the assessee in the taxable turnover of the assessee. The assessee contended that the tax which is separately shown is not part of the price of the articles sold, and in fact they are not entitled to sell the tractors for more than the price fixed under the Price Control Order. The assessing authority rejected this claim on the ground that the Control came into effect only on and from 30th March, 1967, but the transaction in this case were between 2nd March, 1967, and 30th March, 1967. At the appellate stage, the assessee pointed out that though the Control Order as such was issued on 30th March, 1967, the Government of India by their letter dt. 2nd
