MAHALAKSHMI TEXTILE MILLS LTD Vs. STATE OF MADRAS

JUDGEMENT

(1.) The assessee is the owner of a mill at Pasumalai in Madurai district. Under the Cotton Textiles (Export Control) Order, 1949, every mill which manufactures yarn or cloth is obliged to allocate a portion of the yarn or cloth produced for export outside the Indian Union.

(2.) The assesses was taxed on a sum of Rs. 12,55,350 as representing the turnover of the sales of yarn, which he effected to an exporter. This yarn was admittedly the yarn which he was obliged to retain and sell for export under the Cotton Textiles (Export Control) Order, 1949. Instead of himself selling for export, the assesses sold it to another and that another exported the goods outside India. The assessee had no export licence. In view of these facts, the Tribunal held that the assessee was not within the exemption in Article 285, Sub-section (1)(b) of the Constitution. The correctness of this is the first point which is raised on behalf of the assessee by Mr. Kuppuswami learned counsel for the assessee. In view of the two recent decisions of the Supreme Court, we think that the conclusion reached by the Tribunal is correct and the assessee is not on titled to the exemption. In the first Travancore case, -- 'State of Travancore-Cochin v. Bombay Co., Ltd., AIR 1952 SC 366 (A) a sale by export is explained as involving a

(3.) The second point raised is that as the assessee made certain purchases of cotton through his agents at Them, while the mill is at Pasumalai, without a separate licence for the business which he carried on at Them, he would not be entitled to the benefit of the lower rate under Section 5 of the Act. It is no doubt true that in September 1951, a definition of place of business was added in the Madras General Sales-tax Rules, but that definition does not apply to the present case. Form I (Application for licence) clearly states "Principal place of business and also place of business of each of the branches, as each of them would require a separate licence. Unless therefore it is established that there is a separate branch of thebusiness, he could not be required to obtain another licence for that business. Under the original licence which he obtained for the business at Pasumalai, he would undoubtedly be entitled to the lower rate of tax under Section 5 of the Act. If a person through his agents makes purchases from various places in the State, merely because of those purchases, apart from the definition which has been later introduced, he cannot be treated as carrying on business at all the places to which his agents went and purchased the goods. The more definite and tangible test is indicated in the licence form No. 1, that there should be a branch of the business and not merely a stray act of purchase through his own agents or by himself. The view taken by the Appellate Tribunal therefore that a separate licence is required and that ha should pay separate fee is not warranted by the rule as it stood during the relevant year. The assessee is entitled to the refund of Rs. 250 licence fee plus the penalty of Rs. 5 levied on him. In this respect the order of the Appellate Tribunal is modified and in other respects the order is confirmed. As the petitioner has substantially failed he will pay the costs of the respondent, Rs.250/-.