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1965 (11) TMI 143 - HC - VAT and Sales Tax
Issues:
Interpretation of sales tax liability - inter-State trade or intra-State sales Analysis: The case involved a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958 to determine whether sales of manganese totaling Rs. 2,77,976.45 were in the course of inter-State trade or intra-State sales. The assessee, engaged in selling manganese, contended that the sales were either exports or inter-State sales, thus not liable for tax under the local Act. The Sales Tax Tribunal accepted the argument that the sales were in the course of inter-State trade and remanded the matter for assessment under the Central Sales Tax Act, 1956. The Tribunal established that the sales of manganese were made to various buyers under written agreements specifying the transport arrangements. The contracts involved loading manganese at a railway siding in Madhya Pradesh for delivery to locations outside the state, with payment terms based on weighbridge measurements at the destination. These contractual terms clearly indicated inter-State sales, as emphasized in the Bengal Immunity Co. Ltd. v. State of Bihar case. The legal backdrop of the case included the Constitutional amendment of Article 286 in 1956, empowering Parliament to legislate on inter-State trade principles. The Central Sales Tax Act, 1956, defined inter-State sales based on the movement of goods between states. Citing precedents, the Court affirmed that the movement of manganese from Madhya Pradesh to destinations outside the state was a direct result of the sales contracts, qualifying them as inter-State sales under the Central Sales Tax Act. Consequently, the Court concluded that the turnover in question represented inter-State sales of manganese, absolving the assessee from tax liability under the local Act. The judgment awarded costs to the assessee and fixed the counsel's fee. The reference was answered in favor of the assessee, affirming the Tribunal's decision for assessment under the Central Sales Tax Act, 1956.
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