BANGALORE EMPORIUM Vs. STATE OF MADRAS

JUDGEMENT

(1.) IN this revision the question arises whether the assessee is liable to pay sales tax on the disputed turnover of Rs. 77, 685-08, which according to the assessee represents the value of cloth and tailoring charges and not value of ready-made garments.

(2.) THE assessee is the proprietor of Bangalore Emporium, tailors and dealers in cloth, hosiery goods etc., at No. 6, Club House Road, Madras-2. He submitted his return in Form A for the year ended 31st March, 1959, showing a gross and net turnover of Rs. 4, 922-81 and Rs. 4, 842-08 respectively. THE Deputy Commercial Tax Officer determined his net turnover for the year to the best of his judgment at Rs. 2, 10, 979-59, the total receipts discovered by the books, and subjected it to tax at the rate of 1 per cent. THE assessee preferred an appeal to the Appellate Assistant Commissioner of Commercial Taxes. That officer after giving relief in respect of some items determined the turnover at Rs. 77, 685-08 representing the receipts for sale of hosiery goods and value of cloth and tailoring charges. Against this order a further appeal was filed by the assessee to the Sales Tax Appellate Tribunal, which on the facts found that there was no separate sale of cloth to the customers and collection of tailoring charges and that the transaction was sale of ready-made garments.

(3.) WE cannot agree with this observation because the moment the customer selects the cloth from the piece-goods department, settles the price and pays an advance and the cloth so selected is cut and set apart for his use, it becomes his property and is appropriated by him, and the assessee thereafter only supplies work and labour for making the cloth into garments. It is immaterial whether the cloth so selected by the customer is cut in his presence or subsequently and then sent to the tailoring department by the assessee for the purpose of stitching. Thus the transaction consists of two parts, one the sale of cloth by the assessee to his customers and the other contract for work and labour. The assessee relied on the decision in Indralaya Ltd. v. Additional Commissioner, Commercial Taxes in support of his case that there was no sale of garments. In that case the facts are similar to the facts of the present case. The learned Judge laid down four tests to be applied for ascertaining whether a particular transaction is a sale of ready-made garments or comprised a sale of goods and contract for work and labour. For that purpose transactions are delivered into four distinct groups and they are set out at page 637 as follows :-