1967 (2) TMI 78 - SC - VAT and Sales Tax

CONTRACT FOR SUPPLY OF GOODS INSPECTION AT RAILWAY STATION WITHIN STATE RAILWAY STATION SPECIFIED AS PLACE OF DELIVERY GOODS BOOKED BY RAIL TO CONSIGNEE OUTSIDE STATE PRESUMPTION THAT SALE TOOK PLACE WITHIN STATE

Summary

Issues:
1. Assessment of sales tax on a petitioner-firm by Sales Tax Officer.
2. Dispute regarding the place of delivery of goods for sales tax assessment.
3. Interpretation of contract terms and implications on sales tax liability.
4. Application of Article 286(1) of the Constitution in determining sales tax jurisdiction.

Detailed Analysis:
1. The judgment pertains to an appeal against the assessment of sales tax on a petitioner-firm by the Sales Tax Officer, upheld by the Appellate Assistant Commissioner and the Commissioner of Sales Tax. The petitioner-firm had its head office in Kanpur and a branch office in Madhya Pradesh, where it was assessed to sales tax for timber sales during a specific period.
2. The dispute primarily revolved around the place of delivery of goods for sales tax purposes. The Sales Tax Authorities contended that the title to goods passed within Madhya Pradesh, and delivery and completion of sales also occurred within the state, despite subsequent movement of goods outside the state. The petitioner argued that goods were sent for consumption outside the state and were actually delivered beyond state boundaries for consumption.
3. The High Court analyzed the terms of the contract between the petitioner and the Director-General of Stores, Supplies and Disposals, Government of India. It noted that the contract specified delivery "F.O.R. Mandla Fort," where timber was inspected, approved, and dispatched by the petitioner. The High Court found that actual delivery occurred at Mandla Fort, as per the contract terms, despite goods eventually reaching consignees outside Madhya Pradesh.
4. The judgment discussed the application of Article 286(1) of the Constitution in determining sales tax jurisdiction. It referenced a previous judgment related to the same issue and highlighted the importance of contract terms in establishing the place of delivery for sales tax liability. The Court emphasized that in the absence of evidence showing actual delivery outside Madhya Pradesh, the prima facie inference pointed to delivery at Mandla Fort, in accordance with the Sale of Goods Act.
5. Ultimately, the Court dismissed the appeal, upholding the High Court's decision that goods were deemed delivered at Mandla Fort within Madhya Pradesh for sales tax assessment purposes. The judgment emphasized the significance of contractual terms and the lack of evidence supporting actual delivery outside the state, leading to the rejection of the appeal with costs.