1959 (11) TMI 47 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether transactions of sale involving the movement of goods from one area to another within the same State post re-organisation of States can be deemed as inter-State sales.

Analysis:
The case involved a revision where the petitioners, dealers in cycle and cycle parts at Secunderabad, contended that sales made by them to dealers in the Andhra area should be considered inter-State sales post the re-organisation of States on 1st November, 1956. The petitioners argued that due to the existence of separate Acts governing different areas within the State of Andhra Pradesh, their sales should be treated as inter-State transactions. However, the Sales Tax Appellate Tribunal and subordinate authorities rejected this contention, leading to the revision.

The re-organisation of States in India brought about changes in territorial boundaries and laws governing different regions. The Andhra State Act established the State of Andhra in 1953, and the States Re-organisation Act of 1956 led to the formation of Andhra Pradesh by merging territories from Hyderabad and Andhra. The Act preserved existing laws in force in specific territories until adaptations were made by competent authorities.

The legal provisions under the States Re-organisation Act, specifically Sections 119, 120, and 121, ensured the continuation of pre-existing laws in territories despite re-organisation. The Andhra Pradesh Adaptation of Laws Order, 1957, made adaptations to existing laws like the Madras General Sales Tax Act and the Hyderabad General Sales Tax Act to ensure their applicability post re-organisation.

The Court emphasized that post re-organisation, the Telangana and Andhra areas constituted one State, and the preservation of pre-existing laws did not change the nature of transactions within the State. The movement of goods across State borders is crucial for defining inter-State trade, and since the State of Andhra Pradesh was considered one entity, the transactions in question were deemed intra-State sales, not inter-State sales.

In conclusion, the Court dismissed the revision case, upholding that transactions involving movement of goods within the State of Andhra Pradesh post re-organisation cannot be classified as inter-State sales. The petitioners' contention was deemed unsustainable, and the case was dismissed with costs.