1967 (7) TMI 115 - HC - VAT and Sales Tax

Summary

Issues:
Determining whether sales amounting to Rs. 34,468.38 nP. were made in the course of interState trade and commerce or were intra-State sales.

Analysis:

1. Background: The Sales Tax Tribunal made a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, regarding the nature of sales made by an assessee-firm dealing in manganese ore.

2. Facts of the Case: The assessee-firm was assessed for sales of manganese as intra-State sales. However, the assessee claimed the sales were interState sales exempt from State tax. The sales were made to two companies in Nagpur, with delivery at Katangi railway station and payment conditions specified in the contracts.

3. Tribunal's Decision: The Tribunal held that the movement of goods from Katangi to Gondia was due to the terms of the contract, making the transactions interState sales under section 3 of the Central Sales Tax Act, 1956.

4. Legal Framework: Section 3 of the Central Sales Tax Act defines interState sales based on the movement of goods. The Tribunal relied on the Supreme Court's decision in Tata Iron and Steel Co. Ltd. v. S.R. Sarkar to support its conclusion.

5. Test for InterState Sales: The judgment emphasized that the movement of goods, as a result of the contract, determines whether a sale is interState or intraState, regardless of where the title passes.

6. Revenue's Argument: The Advocate-General argued that the sale was complete upon delivery at Katangi, and further movement of goods should be solely for delivery to the buyer to qualify as interState sales.

7. Assessee's Argument: The assessee's counsel referred to a previous case where similar circumstances were deemed interState sales, but the current case involved movement post-sale and not for delivery purposes.

8. Court's Finding: The Court determined that the movement of goods in this case was not due to the sale and was not for delivery to the buyer outside the State, concluding that the sales were intraState.

9. Error in Tribunal's Conclusion: The Tribunal erred in considering the final payment condition for weight determination at Gondia weigh-bridge as a sale condition, leading to an incorrect application of the Supreme Court's test.

10. Conclusion: The Court held that the sales in question were intraState sales, not interState, and directed the assessee to pay costs. The reference was answered accordingly.