1969 (12) TMI 101 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Determination of whether the assessee was an "importer" within the meaning of rule 2(d-1)(b) of the U.P. Sales Tax Rules.
2. Liability of the assessee to pay sales tax on the turnover of kerosene oil imported from outside Uttar Pradesh.

Issue-Wise Detailed Analysis:

1. Determination of Whether the Assessee was an "Importer" Within the Meaning of Rule 2(d-1)(b) of the U.P. Sales Tax Rules:
The primary issue was to determine if the assessee qualified as an "importer" under rule 2(d-1)(b) of the U.P. Sales Tax Rules. The relevant facts, as derived from the assessment, appellate, and revisional orders, indicated that the assessee, a distributor of Caltex Co. Ltd., placed orders for kerosene and diesel oil, which were then supplied from both within and outside Uttar Pradesh. The key contention was whether the movement of kerosene oil into Uttar Pradesh was a direct result of a prior contract of sale between the assessee and Caltex Co. Ltd.

The court examined the provisions under section 3-A of the U.P. Sales Tax Act, which allows the State to tax certain goods at a single point in the series of sales. The notification relevant to this case (Notification No. ST-905/X dated 31st March 1956) specified that kerosene oil was taxable at the point of sale by the importer when imported from outside Uttar Pradesh. The term "importer" as per rule 2(d-1)(b) was crucial, which defines an importer as the dealer who makes the first sale after the import when goods are imported for resale in the same condition.

The court concluded that the assessee was the importer because the kerosene oil was imported into Uttar Pradesh as a direct result of a prior contract of sale between the assessee and Caltex Co. Ltd. This conclusion was based on the fact that the movement of goods was incidental to the contract of sale, making the assessee the importer under rule 2(d-1)(b).

2. Liability of the Assessee to Pay Sales Tax on the Turnover of Kerosene Oil Imported from Outside Uttar Pradesh:
The assessee argued that Caltex Co. Ltd. was the importer since the property in the goods passed to the assessee only after they had crossed into Uttar Pradesh. This argument was based on the terms of the contract and the handling of railway receipts. However, the court found this argument unconvincing, stating that the passing of property was immaterial to determining the liability for sales tax. The key factor was whether the import of goods was the direct result of a prior sale.

The court referenced several precedents, including the Supreme Court's decisions in Tata Iron and Steel Co. Ltd. v. S.R. Sarkar and Cement Marketing Co. of India (Private) Ltd. v. The State of Mysore, which established that a sale occasioning the movement of goods from one state to another is an inter-State sale. Applying this principle, the court held that the assessee's contract with Caltex Co. Ltd. occasioned the import, making the assessee liable for sales tax on the turnover of kerosene oil.

The court also dismissed the relevance of the property passing location, emphasizing that the import was a necessary incident of the contract of sale. The court cited the Full Bench decision in National Carbon Co. v. Commissioner of Sales Tax, which supported the view that the stage at which the sale takes place is immaterial as long as the sale occasions the import.

Conclusion:
The court concluded that the assessee was an "importer" within the meaning of rule 2(d-1)(b) of the U.P. Sales Tax Rules and was therefore liable to pay sales tax on the turnover of kerosene oil imported from outside Uttar Pradesh. The question referred was answered accordingly, and the Commissioner of Sales Tax was entitled to costs assessed at Rs. 100.