STATE OF MADRAS Vs. SHEIK ISMAIL

JUDGEMENT

(1.) THE assessees in this case are manufacturers of beedies, under the trade name of "bavutta". For the assessment year 1963-64 they reported total and taxable turnovers of Rs. 4, 19, 122. 39 and Rs. 3, 284. 50 respectively under the Madras General Sales Tax Act, 1959.

(2.) THE assessing authority after examining their accounts, took the view that they had actually sold beedi leaves, thread, etc. , to the various contractors to the extent of rs. 67, 782. 85. He, therefore, held that the said turnover is liable to tax at 2 per cent under the Act. THE assesses however objected to the said proposal stating that the supply of beedi leaves to the contractors cannot amount to a sale, that, in fact, the supply was made along with the tobacco mixture for the purpose of rolling them into beedies, and that though in the contract between the assesses and the contractors, they referred to the supplies of beedies as one of sale, there was in fact no sale at all. THE assessing authority, however, overruled the objection and proceeded to assess the said disputed turnover on the ground that there was actually a sale of beedi leaves and thread by the assessees to the contractors. THE Appellate Assistant commissioner also upheld the order of the assessing authority in this regard. THEre was a further appeal to the Sales Tax Appellate Tribunal.