STATE OF MADRAS Vs. ERODE YARN STORES

JUDGEMENT

(1.) THE question that is raised by this revision petition filed by the State of Madras is what is the turnover for purposes of the licence under section 5 of the Act. THE assessee is a dealer in yarn. In respect of the assessment year 1955-56, the assessing authority determined the turnover taxable at 3 pies in the rupee at Rs. 71, 846-2-6 and the turnover subject to tax at 1/2 per cent. at Rs. 3, 87, 032-6-6. THE turnover covered by the licence was fixed at Rs. 39, 99, 544, for which a licence fee of Rs. 2, 000 was levied. On appeal, a certain part of the turnover was deleted from that assessable to tax at 1/2 per cent. and the licensable turnover was accordingly fixed at Rs. 37, 18, 933.

(2.) IN the appeal before it, the Tribunal took the view, following earlier decisions of its own, that the licence turnover is the turnover which is assessed to single point tax on the strength of the licence, and that the turnover that gets exempt with or without the licence should be excluded from the computation of the licence fee. Accordingly, the Tribunal fixed the turnover liable to licence fee at Rs. 2, 71, 611.

(3.) IT would not normally speaking be necessary to explain the scope of section 5 but for the fact that the scope of the relevant rule defining the turnover in cases where section 5 of the is attracted calls for scrutiny. Rule 6 of the Madras General Sales Tax Rules, 1939 as it stood in the relevant year dealt with licences. Under sub-rule (4)(a) a graduated scale of fees for the grant or renewal of licences was fixed. IT would be noticed that under section 5 as it stood six different commodities were dealt with. Section 5(1) relates to the sale of handspun yarn or cloth woven on handlooms which is declared to be totally exempt from taxation under section 3 of the Act. Sub-rule (4)(b) of rule 6 also provided that the licence for dealing in that commodity was to be free of any charge or fee. In the case of the other commodities covered by section 5(ii) to (vi), sub-rule (4)(a) provided different rates of licence fees. For instance, for dealing in cotton or cotton yarn other than handspun yarn, the licence fee was Rs. 75. For dealing in cloth woven on handlooms wholly or partly with mill yarn the licence fee was Rs. 25. For dealing in bullion and/or specie the fee was Rs. 100. This was the minimum fee upto the limit of turnover of Rs. 20, 000 per annum in each of these cases. The expression used against the column fixing the fee is "if the turnover does not exceed Rs. 20, 000 per annum." the question really centres round what is meant by "turnover" in this rule.