State of Tamil Nadu vs Jay Bi Traders

Venkataswami, J.—The only point argued before us by the learned Additional Government Pleader in this case is whether printed paper,

which admittedly falls under entry 117 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, but mistakenly subjected to multi-

point tax at 4 per cent and subsequently converted into envelope and sold, should be taxed at 4 per cent again bringing it under entry 117.

According to the learned Additional Government Pleader, the vendor and the buyer as well as Revenue were under the impression that the printed

paper originally sold was exigible to multi-point tax, though it is now conceded that it will fall under entry 117 of the First Schedule, and as such the

Revenue has lost 4 per cent on that account. The difference between single point tax and multi-point tax can be levied, when the envelope is

manufactured out of the printed paper. We do not think the learned Additional Government Pleader is right in his submission that the envelope

manufactured out of printed paper must be treated as multi-point goods and therefore exigible to tax again. The learned Additional Government

Pleader is definitely of the view that the envelope manufactured out of the printed paper will again fall under entry 117 of the First Schedule. If so,

because the Revenue had made a mistake in collecting multi-point tax on the first sale of the paper which fell under entry 117, it cannot again be

subject to tax on the second sales of the envelope made out of the same paper. The proviso says that if any paper has suffered tax under any of the

items mentioned, that shall not be subjected to tax again. Therefore, the criteria for examination is whether the sale is first sale or second sale and

not with reference to levy of rate of tax. Accordingly, we are not able to agree with the learned Additional Government Pleader. The tax case fails

and is dismissed. There will be no order as to costs.

Petition dismissed.