1966 (9) TMI 131 - HC - VAT and Sales Tax

Summary

Issues:
Inter-State vs. intra-State sales classification under Madhya Pradesh General Sales Tax Act, 1958.

Analysis:
The case involved determining whether sales amounting to Rs. 2,74,965.77 were inter-State or intra-State sales under the Madhya Pradesh General Sales Tax Act. The assessee, a registered dealer, claimed that sales of oil-seeds to a Nagpur merchant constituted inter-State trade. The transactions involved the Nagpur buyer providing standing instructions for purchase and supply of goods, with goods dispatched to parties outside the state based on instructions received via phone, letters, or telegrams. Both the revenue and the Tribunal ruled against the assessee.

In a previous order, the court directed the Tribunal to provide a fuller statement of the case. Despite no written contract between the assessee and the Nagpur buyer, the Tribunal provided a supplementary statement detailing the transactions. The Tribunal noted the absence of relevant documents withheld by the assessee, indicating deliberate non-disclosure.

The first appellate authority found that the property in the goods had passed to the Nagpur buyer upon unconditional appropriation, with subsequent dispatch instructions received from the buyer for goods sent to Madras parties. The Tribunal concluded that the movement of goods to Madras was not a result of a contract of sale between the assessee and the Nagpur merchant, but to fulfill contracts between the Nagpur and Madras parties, thus not constituting inter-State sales.

Referring to Supreme Court judgments, the court reiterated that inter-State sales involve the movement of goods as a result of a contract of sale. Applying this principle, the court upheld the Tribunal's decision that the sales were intra-State, as the property in the goods passed within Madhya Pradesh, and subsequent movement was at the behest of the Nagpur buyer, not constituting inter-State trade.

The court concluded that the sales were intra-State and liable for taxation under the Madhya Pradesh General Sales Tax Act. The Commissioner was awarded costs, and the reference was answered accordingly.