1959 (7) TMI 48 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 18 of the Bombay Sales Tax (No. 2) Ordinance, 1952.
2. Liability to pay purchase tax under section 18.
3. Application of section 18 to inter-State and intra-State transactions.

Interpretation of Section 18:
The case involved a dispute regarding the interpretation of section 18 of the Bombay Sales Tax (No. 2) Ordinance, 1952, specifically focusing on the phrase "despatched or brought" and its relationship with the words "as a direct result of a sale to a buyer in the State of Bombay." The court held that the latter phrase governed the words "are actually delivered" and not the preceding words in the section. The judgment emphasized the importance of the term "direct" in determining the liability for purchase tax under section 18, highlighting that goods must be brought into the State as a direct result of a sale for the tax to be applicable.

Liability to Pay Purchase Tax:
The case revolved around the liability of the petitioner to pay purchase tax under section 18 of the Bombay Sales Tax (No. 2) Ordinance, 1952. The petitioner, in this instance, had purchased a motor car from Delhi, which was later brought to Bombay for delivery. The Sales Tax Officer assessed the petitioner for purchase tax, which was contested by the petitioner but upheld by the Collector of Sales Tax and the Sales Tax Tribunal. The court examined the facts and circumstances of the case and concluded that the liability to pay purchase tax hinged on whether the vehicle was brought into Bombay as a direct result of the sale to the petitioner. The court directed the Tribunal to provide a supplementary statement of fact to determine this crucial aspect.

Application of Section 18 to Inter-State and Intra-State Transactions:
An additional issue raised was whether section 18 of the Ordinance applied solely to inter-State transactions and not to intra-State transactions. The court did not delve deeply into this issue but focused on the core aspect of liability under section 18, emphasizing the direct link between the sale and the bringing of goods into the State as a determining factor for purchase tax applicability. The court's decision highlighted the need for a clear connection between the sale and the physical delivery of goods within the State to trigger the liability for purchase tax under section 18.