1953 (5) TMI 10 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the assessee is a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act.
2. Whether there was any sale by the assessee in Bihar within the meaning of Section 2(g) of the Bihar Sales Tax Act.

Issue-Wise Detailed Analysis:

1. Whether the assessee is a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act:

The assessee, an incorporated company, was assessed to sales tax for eight quarters starting from 1st October 1944. The Sales Tax Officer, Bhagalpur Circle, assessed the company, which contended that the sales took place in Calcutta and not in Bihar, and thus it was not a "dealer" as defined under the Act. The Assistant Commissioner and the Commissioner affirmed the decision of the Sales Tax Officer. The Board of Revenue also dismissed the assessee's petitions, but referred two questions of law to the High Court.

The High Court examined whether the company was a dealer under Section 2(c) of the Bihar Sales Tax Act, which defines a dealer as "any person who carries on the business of selling or supplying goods in Bihar." The assessee conceded that it sold chemicals to various dealers in Bihar, and the title to the goods passed in Bhagalpur when the railway receipts were handed over after payment. Thus, the first question was answered affirmatively, acknowledging the company as a dealer within the meaning of the Act.

2. Whether there was any sale by the assessee in Bihar within the meaning of Section 2(g) of the Bihar Sales Tax Act:

The second issue was more complex. The assessee argued that the sales to Bhagalpur Municipality and Bhagalpur District Board were effected in Calcutta, where the goods were appropriated against the orders, and thus the sales did not take place in Bihar. The Sales Tax Officer, however, found that the goods were consigned to officers in Bhagalpur and payments were made by cheques on the Bhagalpur branch of the Imperial Bank, concluding that the sales were completed in Bihar.

The High Court analyzed whether the sales were completed in Bihar. Section 23 of the Indian Sale of Goods Act was considered, which states that property in goods passes when goods are appropriated to the contract with the buyer's assent. The Court found that the goods were appropriated at Panihati in Bengal and delivered to a common carrier for transmission to the buyer without reserving the right of disposal. Thus, the property in the goods passed in Bengal, and the sales did not take place in Bihar.

The Court also considered the argument that the Bihar Sales Tax Act, 1944, intended to tax sales where the transfer of title occurred in Bihar. The definition of "sale" in Section 2(g) emphasized the transfer of property in goods. The Court concluded that the Act imposed tax on sales where the transfer of title took place in Bihar, and not on sales concluded outside Bihar.

Conclusion:

The High Court concluded that the assessee was a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act. However, the sales of chemicals to the Bhagalpur Municipality and Bhagalpur District Board were effected in Bengal and were not liable to be taxed in Bihar under the Act. The sales for which the railway receipts were sent to Messrs. Lalji Sao of Bhagalpur were properly taxed as they constituted sales within the meaning of the Act. The questions were answered accordingly.