1959 (9) TMI 37 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether sales by the assessee were liable to Bihar sales tax for the period from 26th January, 1950, to 30th September, 1951, under Article 286(2) of the Constitution and Sales Tax Laws Validation Act, 1956.
2. Whether goods delivered to the Damodar Valley Corporation in Bihar were exempt from sales tax due to being imported against specific orders.

Analysis:

1. The first issue pertains to the liability of the assessee to pay Bihar sales tax for the period from 26th January, 1950, to 30th September, 1951. The High Court determined that for the period up to 31st March, 1951, the assessment was covered by the Sales Tax Continuance Order, 1950, and was not in violation of Article 286(2) of the Constitution. However, for the period from 1st April, 1951, to 30th September, 1951, the assessment was governed by the Sales Tax Laws Validation Act, 1956. The court rejected the argument that certain provisions did not create a liability to tax, citing a Supreme Court decision that upheld the tax imposition. Consequently, the sales by the assessee during the mentioned period were deemed validly taxed, and the issue was decided in favor of the State of Bihar.

2. The second issue involves the exemption from sales tax for goods delivered to the Damodar Valley Corporation in Bihar. The assessee claimed that if they were acting as an agent for a foreign seller with privity of contract between the Corporation and the foreign seller, the sales would be exempt. However, the High Court found no evidence or findings to support this claim. The court emphasized that the question of agency was not raised before any Sales Tax Authority and could not be introduced at the High Court level. The court noted that the assessee had been validly taxed for the goods delivered to the Corporation in Bihar, and the exemption claim was dismissed. The judgment favored the State of Bihar on this issue as well.

In conclusion, the High Court ruled in favor of the State of Bihar on both issues, upholding the validity of the sales tax imposed on the assessee for the specified periods and dismissing the exemption claim for goods delivered to the Damodar Valley Corporation in Bihar. The assessee was directed to pay the costs of the reference, including a hearing fee.