1966 (2) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "inter-State sale" under the Central Sales Tax Act, 1956 in the context of goods sent via V.P.P. from Punjab to Uttar Pradesh.

Analysis:
The judgment by the Punjab High Court involved Sales Tax References Nos. 4 of 1965 and 4-A of 1965, addressing a common legal question referred by the Financial Commissioner. The question pertained to whether goods sent from Punjab to Uttar Pradesh via V.P.P. and subsequently sold were subject to tax under the Central Sales Tax Act, 1956, and if Punjab authorities could levy such tax. The key contention was whether the sale by V.P.P. constituted an inter-State sale, as only inter-State sales are subject to tax under the Act. The court emphasized that the determination of this question was purely legal and did not hinge on the factual aspects of the cases.

The court delved into the definition of "inter-State sale" under section 3 of the Central Sales Tax Act, which deems a sale to occur in the course of inter-State trade if it occasions the movement of goods from one state to another. Referring to precedents set by the Supreme Court, the judgment highlighted that the movement of goods must be a result of the sale contract, and the property in the goods should pass in either state involved. In this case, the actual sale took place in Uttar Pradesh when the parcel was received and payment was made, aligning with the definition of sale under the Act.

Moreover, the court rejected the argument that goods must move before the sale is completed to qualify as an inter-State sale, emphasizing that the sale and movement of goods must coexist for it to be classified as such. The judgment distinguished a prior Supreme Court decision cited by the counsel, clarifying that it did not pertain to the specific provisions of the Sales Tax Act applicable in the present case.

Ultimately, the court concluded that the sale of goods sent via V.P.P. from Punjab to Uttar Pradesh constituted an inter-State sale, making it liable to Central sales tax and confirming the Punjab authorities' jurisdiction to levy such tax. The court directed the assessee to bear the costs of the references, setting the costs at Rs. 100 for each case.

In agreement with the detailed analysis provided by Mahajan, J., the Chief Justice concurred with the decision, and the reference was answered accordingly, resolving the legal query posed before the court.