1966 (12) TMI 61 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the word 'contract' in the proviso of section 4(1) of the Central Provinces and Berar Sales Tax Act, 1947.
Liability of sales amounting to Rs. 13,05,449-3-0 under Explanation II in clause (g) of section 2 of the Central Provinces and Berar Sales Tax Act, 1947.

Analysis:

Issue 1: Interpretation of the word 'contract' in the proviso of section 4(1)
The case involved a reference under section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958, regarding the interpretation of the word 'contract' in the proviso of section 4(1) of the Central Provinces and Berar Sales Tax Act, 1947. The Sales Tax Tribunal referred two questions for decision, primarily focusing on the interpretation of the term 'contract' in the context of the Act. The Tribunal had negated the assessee's contention that the word 'contract' should be interpreted broadly, similar to the Indian Contract Act. The Tribunal relied on previous judgments, including one from the Nagpur High Court, to support its decision. The Tribunal emphasized the specific definition of 'contract' provided in the Act and concluded that the proviso to section 4(1) did not apply in the case at hand. The High Court, after considering various arguments and precedents, upheld the Tribunal's decision, stating that the word 'contract' in the proviso should be interpreted according to section 2(b) of the Act, not as per a general understanding under the Indian Contract Act.

Issue 2: Liability of sales under Explanation II in clause (g) of section 2
The second question raised in the reference concerned the liability of sales amounting to Rs. 13,05,449-3-0 under Explanation II in clause (g) of section 2 of the Central Provinces and Berar Sales Tax Act, 1947. The High Court noted that the sales in question fell under Explanation II and were liable for tax. The counsel for the assessee did not pursue this issue further, acknowledging the tax liability based on the facts presented. The Court confirmed that the sales were indeed subject to tax under the mentioned provision. Consequently, the High Court answered the second question in the affirmative, affirming the tax liability on the sales amount specified.

In conclusion, the High Court resolved the reference by interpreting the term 'contract' in alignment with the Act's definition and affirming the tax liability on the specified sales amount under the relevant provision. The Court's decision was based on a thorough analysis of the statutory provisions, precedents, and the specific circumstances of the case, ultimately upholding the findings of the Sales Tax Tribunal.