LAWS(SC)-1971-10-14

IYANAHALLI BAKKAPPA AND SONS Vs. STATE OF MYSORE

Decided On October 29, 1971
IYANAHALLI BAKKAPPA AND SONS Appellant
V/S
STATE OF MYSORE Respondents

JUDGEMENT

(1.) This Appeal is by certificate against the judgment of the Mysore High Court dismissing the Revision Petition against the order of the Mysore Sales Tax Appellate Tribunal, by and under which the assessment order of the Commercial Tax Officer and the Appellate order of the Deputy Commissioner of Commercial taxes was confirmed. The question of law which arose out of the decision of the Sales Tax authorities for consideration of the High Court was "whether on the facts and circumstances of the case the assessee's turn-over in respect of safety matches is not liable to tax on the ground that the sales effected by the assessee are not the first sales in the State." The appellants declared for the assessment year 1959-60 a total turnover of Rs. 13,04,097/- in respect of the purchase of safety matches and claimed exemption on the entire turnover on the ground that it was a subsequent sale from the dealers in the State of Mysore. During the relevant assessment year sale of matches was taxable under Section 5 (3) (a) of the Mysore Sales Tax Act, 1957 (hereinafter called the Act) on the first or earliest of the successive dealers in the State of Mysore. The appellants' contention was that it purchases the matches from the Sales Depots of the National Match Works, Lakshmi Match Works and Palaniappa Match Industries at Devangere who were the first sellers of matches in the State of Mysore liable to tax and that the appellant was the second dealer in the State not liable to tax in respect of its rules.

(2.) The modus operandi of the appellant in purchasing these matches was that it placed orders with the aforesaid Sales Depots of M/s. National Match Works, Lakshmi Match Works and Palaniappa Match Industries at Devangere, which Depots are registered dealers under the Act. On receipt of these orders from the Appellant the respective Managers of the three Sales Depots forward the orders to their Head Offices at Sivakasi and instruct them to dispatch the matches ordered direct to the appellant at Devangere. The matches are thereafter dispatched by lorry to the Appellant in accordance with the instructions received from the Sales Depots. The Sales Depots send to the appellant detailed invoices of the matches dispatched by their factories. The Appellant gives credit to the valued of the matches after deducting therefrom the amount covered by debit notes in respect of Octroi, lorry freight and other incidental charges incurred by it and at the request of the sales office the assessee remits the value of the matches direct to the factory by means of draft, and telegraphic transfer. On these findings the correctness of which was not disputed the assessing authority came to the conclusion that the transactions were inter-State sales within the meaning of Section 3 (a) of the Central Sales Tax Act and since the appellant was the first dealer in matches in Mysore State it was liable to pay Sales Tax and accordingly, it was so assessed. Against the said assessment order the appellant filed an appeal to the Deputy Commissioner of Commercial Taxes who dismissed the Appeal. The further appeal to the Tribunal was equally unsuccessful.

(3.) Before us it is contended by the learned Advocate for the appellant relying upon the dispatch advice, delivery notes and invoices issued in the name of the assessee in which the sales Tax at 2% was charged that the sale by the manufacturer at Sivakasi was effected in favour of their respective Sales Depots in Mysore and it is only thereafter that the appellants purchased from these Sales Depots the matches and cannot therefore be treated as the first purchaser in the Mysore State. It appears to us on the facts as set out above which were not in dispute, the sales were made by the respective factories direct to the appellant, the sales price was also sent directly to the factories at Sivakasi. No doubt the orders were routed through the Sales Depot but on that account it cannot be said that the factory sold the goods ordered by the appellant to its Sales Depot. It does not appear that the contention based on the invoices showing that the Sales Tax was charged by the Sales Depot was urged before any of the authorities or before the High Court nor was there any finding on this aspect as is evident from the facts found by the Sales Tax authorities which were not in dispute. It is also inconceivable that there can be a sale between the manufacturer and its Sales Depot.