1963 (4) TMI 23 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of the assessee to pay tax under the Central Sales Tax Act for inter-State sales.
2. Determination of whether the sales in question were in the course of inter-State trade.
3. Identification of the appropriate State entitled to collect sales tax for inter-State sales under the Act.

Analysis:
1. The judgment concerns a revision against an order by the Tribunal holding the assessee liable to pay tax under the Central Sales Tax Act for inter-State sales in the year 1957-58. The assessee, a paddy and rice merchant, registered under the Act, submitted returns and paid tax. However, an appeal was filed claiming a refund, which was dismissed by the Appellate Assistant Commissioner and subsequently by the Tribunal.

2. The nature of the transactions involved the assessee dispatching goods to Kerala with specific instructions and safeguards for payment. The key issue was whether these sales constituted inter-State sales under section 3 of the Act. The Tribunal concluded that the sales were indeed inter-State sales under section 3(b), which involves the transfer of documents of title to goods during their movement between states.

3. The judgment also delves into determining the appropriate State entitled to collect sales tax for the inter-State sales. The relevant provisions of the Act, including section 9(1) and the definition of "appropriate State" in section 2(a), were considered. The Supreme Court's interpretation in Tata Iron and Steel Co. Ltd. v. S.R. Sarkar was referenced to establish that the appropriate State for tax collection is where the transfer of title to goods occurs, which in this case was found to be Kerala.

4. The Tribunal's application of section 4(2) in determining the appropriate State was deemed erroneous by the High Court. It was clarified that section 4 is subject to section 3, and in cases of conflict, section 3 prevails. The Tribunal's failure to consider the unconditional nature of appropriation to the contract for property transfer further led to the setting aside of the order determining Madras State as the appropriate State for tax collection.

5. Consequently, the High Court allowed the revision petition, emphasizing that the appropriate State for tax collection in inter-State sales under section 3(b) is where the transfer of title occurs, which in this case was Kerala. The assessee's liability to pay tax under the Act for the inter-State sales was upheld, and the Tribunal's order regarding the appropriate State for tax collection was set aside.