SALES TAX OFFICER, LAHORE vs Messrs INTERNATIONAL BODY BUILDERS, FEROZEPUR ROAD, LAHORE And Other
This is a petition for special leave to appeal directed against the judgment and order of the High Court in a writ petition concerning the assessment of sales tax on the construction and repair of bus and truck bodies by the respondent. The core legal question was whether the respondent's business activity constituted a sale of goods rendering it liable to pay sales tax, or a contract for the performance of work exempting it from the same. The Supreme Court held that the High Court committed no error in setting aside the order of the Appellate Tribunal and remanding the matter for a proper determination of this basic question, which the tax authorities had failed to address initially. The Supreme Court dismissed the petition, laying down the principle that tax authorities must first determine the foundational nature of a business transaction as either a sale of goods or a contract for work before imposing tax liability.
- Whether the construction of bus and truck bodies using customer-supplied chassis amounts to a sale of goods or a contract for the performance of work?
- Can tax authorities impose sales tax liability without first determining the basic nature of the taxpayer's business transaction?
- Is an order of remand by the High Court for determining foundational factual and legal questions open to interference by the Supreme Court under special leave to appeal?
SAAD SAOOD JAN, J.--This is a petition for special leave to appeal from the judgment and order dated 9-5-1979 in Writ Petition No.68 of 1972.
2. Respondent No. l is engaged in the business of construction and repair of bus and truck bodies.
The chassis are supplied by the customers and the bodies thereon are constructed by it with its own labour and material. The Sales-tax Officer called upon it to pay sales-tax In respect of the bodies constructed by it for its customers. It challenged the assessment made by the Sales-tax Officer in appeal before the Appellate Assistant Commissioner. One of the grounds taken by it was that it was not selling any goods to its customers and as such the provisions of Sales-tax were not applicable to its business. This contention was rejected by the Appellate Assistant Commissioner who then after some modifications maintained the order of assessment. Respondent No. l then preferred an appeal before the Appellate Tribunal wherein it agitated the same legal objection but without any success. It then invoked the constitutional jurisdiction of the High Court. The High Court took the view that the business of respondent No. l could be categorized as either the sale of goods or a contract for the performance of work: if it fell in the former category respondent No. 1 was liable to pay sales-tax but if it fell in the latter category it was not liable to pay any sales-tax: further, it needed an inquiry to find out in which category the business of respondent No. l fell. In this view of the matter the High Court set aside the order of the Appellate Tribunal with the direction that it should first decide on the basis of the agreement or other facts before it whether the business of respondent No. l was of sale of goods or a contract for work. The petitioner seeks leave to appeal against this order of remand.
3.After hearing the learned counsel we do not think that this is a fit case for interference by this Court. The question raised in the High Court was of a basic nature and it ought to have been determined by the sales-tax authorities before saddling respondent No. l with the liability to pay sales-tax. As this basic question was not determined by the Appellate Tribunal no fault can be found with the order oil remand made by the High Court. This petition is accordingly dismissed.