1968 (7) TMI 65 - HC - VAT and Sales Tax

Summary

Issues: Assessment of sales tax under the Central Sales Tax Act for sales made to dealers in Jammu and Kashmir, applicability of Central Sales Tax Act in Jammu and Kashmir, liability of tax on inter-State sales, constitutionality of tax rates under section 8(2) in comparison to section 8(1).

Analysis:
The judgment of the Court addressed the assessment of sales tax under the Central Sales Tax Act for sales made to dealers in Jammu and Kashmir by M/s. R.B. Narain Singh Sugar Mills Ltd. The Sales Tax Officer accepted the contention that the turnover of Rs. 1,30,813.25 was exempt from Central sales tax as it was considered export outside the territory of India due to the non-applicability of the Central Sales Tax Act in Jammu and Kashmir. However, the Additional Judge (Revisions) Sales Tax held that the turnover was taxable under the Act. The question referred to the Court was whether the sales to dealers in Jammu and Kashmir were taxable under the Central Sales Tax Act when the Act was not applicable in Jammu and Kashmir.

The Court analyzed the provisions of the Central Sales Tax Act, particularly section 3, which determines when a sale is considered to take place in the course of inter-State trade or commerce. It was established that if a sale occasions the movement of goods from one State to another, it is an inter-State sale. The liability to pay tax on such sales is placed on dealers effecting inter-State sales, as per sections 6 and 9(1) of the Act. In this case, the sales were considered inter-State sales as the movement of goods commenced in Uttar Pradesh, even though the goods were destined for Jammu and Kashmir. The Court relied on precedents from the Madras and Punjab High Courts to support this interpretation.

Furthermore, the Court addressed the argument regarding the constitutionality of tax rates under section 8(2) in comparison to section 8(1) concerning inter-State sales. The petitioner contended that the higher tax rate imposed on sales to Jammu and Kashmir discriminated unconstitutionally against such transactions. However, the Court declined to entertain this argument, stating that it is not within their jurisdiction to pronounce on the vires of a provision of the statute, citing relevant case law.

In conclusion, the Court answered the question in the affirmative, stating that the sales to dealers in Jammu and Kashmir were taxable under the Central Sales Tax Act. The Commissioner of Sales Tax was awarded costs, and the reference was answered in the affirmative.