1963 (3) TMI 34 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether powdered milk and condensed milk are exempt from tax as milk or taxable as milk products?
2. Whether the assessee is considered a dealer under the U.P. Sales Tax Act?
3. Whether the sale took place within the State of Uttar Pradesh?

Analysis:

Issue 1:
The first issue revolves around whether powdered milk and condensed milk qualify as "milk" under section 4(1) for tax exemption or are considered taxable as milk products. The Court determined that while condensed milk and milk powder are derived from milk, they are distinct from milk itself. The exemption under section 4(1) applies to essential items like water, milk, salt, newspapers, and motor spirit. The Court emphasized that condensed milk and milk powder do not fall under the category of "milk" due to not being universally required daily items. The judgment cited a previous case to support the interpretation of "milk" as a staple product. Additionally, a notification by the State Government exempted specific milk products, indicating a differentiation between milk and milk products. As condensed milk involves the addition of sugar and milk powder is essentially dehydrated milk, they were categorized as milk products, not exempt from tax when sold in sealed containers. Therefore, the Court answered question 1 in the negative, against the assessee.

Issue 2:
The second issue addresses whether the assessee qualifies as a dealer under the U.P. Sales Tax Act. The Court analyzed the business activities conducted by the assessee in Uttar Pradesh, despite its headquarters being in Calcutta and having no physical office in Uttar Pradesh. The definition of "dealer" encompasses engaging in business activities within the state. The Court determined that the presence of the assessee's agents in Uttar Pradesh, acting on its behalf in delivering goods and completing sales transactions, constituted carrying on business within the state. Reference to relevant case law emphasized that physical presence or representation through agents suffices to establish conducting business activities. The Court highlighted the significance of the location where goods are delivered and contracts are executed in determining business presence. As the assessee's agents operated in Uttar Pradesh to facilitate sales, the Court affirmed that the assessee was indeed a dealer within the state. Therefore, the answer to question 2 was affirmative, in favor of considering the assessee as a dealer.

Issue 3:
The final issue pertains to determining the location of the sale, specifically whether it occurred within the State of Uttar Pradesh. The Court deemed this question irrelevant in light of establishing the assessee's liability for sales tax and the nature of the goods sold. Given the absence of crucial facts regarding the passing of property in the goods, the Court could not definitively ascertain where the sale took place. However, based on the previous findings regarding the assessee's business operations and tax liability, the Court concluded that the sale could not be deemed as not happening within Uttar Pradesh. Therefore, if the question were to be answered, it would affirm that the sale indeed took place within the State of Uttar Pradesh.

In conclusion, the judgment addressed the classification of powdered milk and condensed milk, the assessee's status as a dealer, and the location of the sale within Uttar Pradesh, providing detailed legal reasoning and referencing relevant case law to support the decisions rendered by the Court.