SREE MEENAKSHI MILLS LTD Vs. STATE OF MADRAS

JUDGEMENT

(1.) SREE Meenakshi Mills Limited, a company incorporated under the Indian Companies Act, has branches of its own at Paravai and Usilampatti, within the State of Tamil Nadu. It deals in cotton, yarn, etc. Apart from the goods manufactured by it, it purchases annually various sundry articles, such as building material, electrical goods and other items. In fact, such miscellaneous items or articles purchased by it form part of its capital assets. It is said that the mills regularly, continuously and frequently supplied such items at cost price, either from its head office or from its branches, to other incorporated companies in which the mills were interested, as also to third parties. It is common ground that all the transactions involved in the disputed turnover of Rs. 1,19,257. 75 were inter-State in character. This turnover was noticed by the assessing authority, when the mills'exigibility to Central sales tax was being examined for the assessment year 1960-61. In fact, in the course of assessment proceedings under the Central Sales Tax Act, 1956, the above turnover was noticed and hence a part of it was subject to the minimum rate of 1 per cent. and the other part at the optimum rate of 7 per cent. (which were the prevailing rates of tax during the assessment year 1960-61, the year with which the case is concerned) due to the non-availability or defective'c'forms produced by the mills before the assessing authority. As against the order of the assessing authority bringing to tax the above turnover, an appeal before the Appellate Assistant Commissioner was unsuccessful. The mills, however, produced a break-up statement of the turnover relating to the sales in question before the Appellate Assistant Commissioner. The appellate authority observed that they were not casual sales and in fact certain sales were of workshop material consisting of angles made to the specification of the buyer and it never doubted that the petitioner was not a dealer in such materials. The Appellate Tribunal, on second appeal, found as follows : " As and when the sister concerns require any such articles they were supplied by the appellants at the cost price without any profit under a debit advice for the amount which would be entered in the accounts. So the original idea of purchasing the goods by the appellants was not only to utilise the purchased articles for the requirements of the appellants but also to sell the same to the sister concerns without any profit, but at the cost price only. They very purpose of having excessive quantity of articles was to sell to the sister concerns without profit as and when required. There is a significant distinguishing feature in these transactions. These transactions related to sales of new unused articles to the sister concerns. "

(2.) THE Tribunal also noticed that the transactions by the petitioner to its sister concerns were not isolated transactions but regular, continuous and frequent and that the original intention at the time of purchase of the goods was not only for meeting the exact requirements of the petitioner but also for selling to others, though not with a profit-motive. THE alternative plea of the petitioner that the sales, if found liable to tax, may be subject to the concessional rate of tax provided the'c'forms were available, was also accepted by the Tribunal.