1985 (9) TMI 314 - SC - VAT and Sales Tax

Whether the resales effected by the assessee were sales within the State? Held that - Appeal allowed. As the assessee resold the goods within the State as mentioned in the declarations in form No. S.T. 17 furnished by the assessee to the selling dealers and it cannot be said that the assessee used the goods for a purpose other than that mentioned in the declarations. We must therefore allow these appeals and set aside the assessments made on each assessee to the extent that the assessments sought to include in the taxable turnover the purchase price paid by the assessee in respect of the goods purchased against declarations in form No. S.T. 17 furnished to the selling dealers. The respondents will pay to the assessee in each appeal costs throughout including the costs of the appeal.

Issues Involved:
1. Interpretation of the Rajasthan Sales Tax Act, 1954, specifically regarding the resale of goods within the State.
2. Determination of whether resales in the course of inter-State trade or commerce can be considered as sales within the State.
3. Applicability and interpretation of the declarations in form No. S.T. 17.
4. The impact of the principles set out in the Central Sales Tax Act, 1956, on the State Act.

Issue-Wise Detailed Analysis:

1. Interpretation of the Rajasthan Sales Tax Act, 1954:
The primary issue revolves around the interpretation of certain provisions of the Rajasthan Sales Tax Act, 1954 (State Act). The case examines whether the resale of goods by the assessee, which were initially purchased with a declaration for resale within the State, can still be considered as such if the resale occurs in the course of inter-State trade or commerce.

2. Determination of Resales in Inter-State Trade:
The court had to decide whether resales made in the course of inter-State trade or commerce could be regarded as sales within the State for the purposes of the declarations in form No. S.T. 17. The Commercial Tax Officers had previously determined that such resales were not within the State, thus including the purchase price in the taxable turnover of the assessee. However, the court found that there is no antithesis between a sale in the course of inter-State trade or commerce and a sale inside the State. Even an inter-State sale must have a situs, which may be within the State or outside it.

3. Applicability of Declarations in Form No. S.T. 17:
The declarations in form No. S.T. 17 stated that the goods were purchased for resale within the State. The court emphasized that the expression "resale within the State" must bear the same meaning it has in the State Act. According to explanation II to sub-section (o) of section 2 of the State Act, a sale is deemed to be within the State if it fulfills the requirements of sub-section (2) of section 4 of the Central Sales Tax Act, 1956. Therefore, the resales by the assessee, though in the course of inter-State trade, were still sales within the State as the goods were specific ascertained goods situated within the State at the time of the contracts.

4. Impact of Central Sales Tax Act, 1956:
The principles of the Central Sales Tax Act, 1956, particularly sections 3 and 4, were crucial in this case. Section 3 defines when a sale is in the course of inter-State trade or commerce, and section 4 provides principles for determining when a sale is inside a State. The court noted that explanation II to sub-section (o) of section 2 of the State Act incorporates sub-section (2) of section 4 of the Central Act. Therefore, the resales were deemed to take place inside the State based on these principles, despite being inter-State sales. The court clarified that the opening words "Subject to the provisions contained in section 3" in sub-section (1) of section 4 of the Central Act do not negate the applicability of sub-section (2) of section 4 for determining the situs of the sale.

Conclusion:
The court concluded that the resales effected by the assessee were indeed sales within the State as per the declarations in form No. S.T. 17. The assessee did not use the goods for any purpose other than that mentioned in the declarations. Consequently, the assessments that included the purchase price of the goods in the taxable turnover of the assessee were set aside. The respondents were ordered to pay the costs of the appeal.

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