1968 (6) TMI 60 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of Section 24 of the Bombay Sales Tax Act, 1959.
2. Definition and application of "turnover of sales" under Section 2(28) and Section 2(36) of the Bombay Sales Tax Act, 1959.
3. Applicability of Section 4(2) of the Central Sales Tax Act, 1956.
4. Impact of Section 75 of the Bombay Sales Tax Act, 1959, on the definition of "sale" and "turnover of sales."

Issue-wise Detailed Analysis:

1. Interpretation of Section 24 of the Bombay Sales Tax Act, 1959:
Section 24 of the Act allows a registered dealer to apply for authorization if the turnover of sales of goods exported from the State outside India exceeds Rs. 30,000. The Tribunal had to determine if the opponent-assessee fulfilled the conditions for such authorization. The relevant conditions for getting authorization under Section 24 are: (1) the dealer must be registered, (2) the turnover of sales must exceed Rs. 30,000, and (3) the turnover must be of goods exported from the State outside India.

2. Definition and application of "turnover of sales" under Section 2(28) and Section 2(36) of the Bombay Sales Tax Act, 1959:
The term "turnover of sales" is defined in Section 2(36) as the aggregate of sale prices received or receivable by a dealer for sales made during a given period. Section 2(28) defines "sale" as a sale of goods made within the State. The Explanation to Section 2(28) includes sales determined to be inside the State per Section 4(2) of the Central Sales Tax Act, 1956. The Tribunal held that the sale of crude groundnut oil exported by the opponent-assessee from Bhavnagar to Spain should be included in the turnover of sales under Section 2(36) of the Act.

3. Applicability of Section 4(2) of the Central Sales Tax Act, 1956:
Section 4(2) of the Central Act determines the situs of a sale. A sale is deemed to take place inside a State if the goods are within the State at the time of the contract or appropriation. The Tribunal applied this principle to conclude that the situs of the sale was at Bhavnagar, Gujarat, thereby including it in the turnover of sales under the Bombay Sales Tax Act. The Tribunal's interpretation was based on the incorporation of Section 4(2) by the Explanation to Section 2(28) of the Bombay Act.

4. Impact of Section 75 of the Bombay Sales Tax Act, 1959, on the definition of "sale" and "turnover of sales":
Section 75 of the Act states that nothing in the Act shall impose or authorize the imposition of tax on sales taking place outside the State, in the course of import or export, or inter-State trade. The Advocate-General argued that this non obstante clause should override the definitions in Sections 2(28) and 2(36), thereby excluding such sales from the turnover of sales. However, the Tribunal and the Court held that Section 75's non obstante clause only prevents the imposition of tax on such sales but does not exclude them from the turnover of sales for purposes like registration or authorization. The Court emphasized that the purpose of Section 24 is to grant privileges and exemptions, not to create tax liability.

Conclusion:
The Tribunal's decision was upheld by the High Court, confirming that the turnover of sales of the opponent-assessee must include the sale of goods exported from Gujarat to Spain. The conditions for authorization under Section 24 were deemed fulfilled, and the reference was answered in the affirmative. The State was directed to pay the costs of the reference to the assessee.

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