1966 (7) TMI 64 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of sales tax deduction on petrol and diesel oil.
2. Nature of sales (inter-State vs intra-State).
3. Definition and applicability of "dealer" under the Kerala General Sales Tax Act, 1963.

Issue-wise Detailed Analysis:

1. Legality of Sales Tax Deduction on Petrol and Diesel Oil:
The petitioner firm contended that the Government had illegally deducted sales tax amounting to Rs. 19,502.53 on petrol and diesel oil supplied to them, asserting that they were not the first purchasers in the State. The Government, however, argued that the sales to the petitioner were the first sales in the State and thus liable to tax under Section 5 of the Kerala General Sales Tax Act, 1963. The court concluded that the sales to the petitioner were indeed first sales in the State and therefore taxable.

2. Nature of Sales (Inter-State vs Intra-State):
The petitioner argued that the sales were inter-State sales and thus not liable to tax under the State law, citing that the contract involved the movement of petrol and diesel oil from Pollachi to Pothundi. The court examined whether the contract necessitated the movement of goods from one State to another, referencing Section 3 of the Central Sales Tax Act and relevant case law. The court found that there was no contractual obligation for the petitioner to purchase petrol and diesel oil from the Government, and the movement of goods from Pollachi to Pothundi was not a necessary incident of the contract. Therefore, the sales were not considered inter-State sales.

3. Definition and Applicability of "Dealer" under the Kerala General Sales Tax Act, 1963:
The petitioner contended that the Government was not a "dealer" as it was not engaged in the business of buying or selling petrol and diesel oil. The court referred to Section 2(viii) of the Kerala General Sales Tax Act, 1963, which defines a "dealer" as any person engaged in the business of buying, selling, supplying, or distributing goods, including the Government if engaged in an adventure in the nature of trade. The court concluded that the Government was indeed a "dealer" as it was engaged in an adventure in the nature of business for supplying petrol and diesel oil, thus making the sales to the petitioner taxable.

Conclusion:
The court dismissed the petition, holding that the sales tax deduction by the Government was legal as the sales to the petitioner were the first sales in the State, and the Government qualified as a "dealer" under the Kerala General Sales Tax Act, 1963. The petitioner's arguments regarding the nature of sales and the definition of a dealer were not upheld. The petition was dismissed without any order as to costs.