1967 (9) TMI 115 - SC - VAT and Sales Tax

Whether the transactions with which are concerned herein this case are sales? Whether there was any material to support the conclusion of the Sales Tax Appellate Tribunal, the final fact-finding authority, that the goods were delivered in the Madras State for consumption in that State? Held that - Appeal dismissed. The contentions of the appellant that the findings of the Tribunal about the quantum of the turnover were not based on any evidence, or that those findings were arrived at in violation of the principles of natural Justice or that the decision of the High Court is perverse, are wholly untenable contentions. At the time of the hearing no reasons were advanced in support of those contentions. Hence those contentions do not merit any detailed examination.

Issues Involved:
1. Whether the transactions in question are "sales" under the Madras General Sales Tax Act, 1939.
2. Whether there was mutual assent in the transactions.
3. Whether the goods were delivered in the State of Madras for consumption.
4. Validity of the findings of the Sales Tax Appellate Tribunal.
5. Whether the High Court's decision is perverse or violates the principles of natural justice.

Issue-wise Detailed Analysis:

1. Whether the transactions in question are "sales" under the Madras General Sales Tax Act, 1939:
The principal question was whether the transactions are sales. Section 2(h) of the Act defines "sale" as every transfer of property in goods by one person to another in the course of trade or business for cash or deferred payment or other valuable consideration. The Court held that this wide definition covers the transactions in question. The power of a State to tax sales is derived from entry 54 of List II of the VII Schedule in the Constitution, which at the relevant time empowered the State to tax the sale or purchase of goods. The Court referred to the decision in State of Madras v. Gannon Dunkerley, which held that the expression "sale of goods" should have the same meaning as in the Sale of Goods Act, 1930.

2. Whether there was mutual assent in the transactions:
The Court examined whether all elements of a valid sale were present, particularly mutual assent. The appellant argued that the transactions were made under compulsion of law and there was no agreement between the parties. However, the Court found that the Controller's directions were confined to narrow limits and there were several matters which the parties could decide by mutual assent. The Court noted that the Controller fixed the base price and determined the buyers, but the parties were free to decide their own terms by consent. The Court concluded that there was mutual assent in several respects, making the transactions sales.

3. Whether the goods were delivered in the State of Madras for consumption:
The appellant contended that there was no material to show that the goods were delivered in the State of Madras for consumption. The Court noted that the burden is on the State to establish facts upon which a subject can be taxed under a financial enactment. The Sales Tax Appellate Tribunal inferred that the goods were delivered for consumption in the Madras State based on the pattern of transactions, the controlled scheme of distribution, and the nature of the buyers. The High Court accepted this inference as reasonable. The Court agreed that it is reasonable to assume that supplies to stockists in a State were for consumption in that State.

4. Validity of the findings of the Sales Tax Appellate Tribunal:
The appellant argued that the Tribunal's findings about the quantum of turnover were not based on any evidence and were arrived at in violation of natural justice. The Court found these contentions wholly untenable. The Tribunal's findings were based on reasonable inferences from the facts proved or admitted, and the High Court rightly accepted these findings.

5. Whether the High Court's decision is perverse or violates the principles of natural justice:
The appellant contended that the High Court's decision was perverse and violated natural justice principles. However, the Court found no merit in these contentions. The High Court's acceptance of the Tribunal's findings was based on a reasonable assessment of the evidence and did not violate any principles of natural justice.

Conclusion:
The appeals were dismissed with costs, as the Court found that the transactions were sales, there was mutual assent, and the goods were delivered in the State of Madras for consumption. The findings of the Sales Tax Appellate Tribunal were valid and based on reasonable inferences, and the High Court's decision was neither perverse nor in violation of natural justice principles.

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