1970 (3) TMI 151 - HC - VAT and Sales Tax

Summary

Issues:
1. Determination of whether the applicant can be classified as a dealer for the purposes of assessment in Uttar Pradesh.
2. Assessment of whether the applicant can be considered an importer.
3. Jurisdictional authority of the Sales Tax Officer at Barabanki for passing the assessment.

Analysis:
1. The primary issue in this case was whether the applicant could be classified as a dealer for assessment purposes in Uttar Pradesh. The applicant, based in Calcutta, received orders from U.P. dealers and dispatched goods to them. The railway receipts were endorsed to the applicant's bankers in Calcutta, who realized the sale price from U.P. purchasers. The assessing authorities held that the applicant was carrying on the business of selling goods in U.P. and thus liable to tax. However, the court distinguished this case from a previous judgment, emphasizing that the applicant did not take delivery of goods in U.P. and had no office or representative in U.P. The court cited a Supreme Court decision to support the view that ancillary activities like supplying goods and collecting payment in U.P. do not constitute carrying on business in the state. The court concluded that the applicant was not a dealer in U.P., ruling in favor of the assessee.

2. The second issue raised was whether the applicant could be considered an importer against whom an assessment could be passed. The court's analysis focused on the role of the applicant's bankers in U.P. in collecting payment from customers. The court determined that the bank's activities were limited to collecting payment and did not extend to selling goods on behalf of the applicant. The court held that the bank could not be considered a business agent of the applicant based on these activities.

3. The final issue pertained to the jurisdiction of the Sales Tax Officer at Barabanki for passing the assessment. The court's analysis highlighted the modus operandi of the applicant's business, where goods were dispatched to U.P. dealers and railway receipts were endorsed to the applicant's bankers for collection. The court concluded that the applicant could not be deemed a dealer in U.P. based on these facts. The court referenced a previous case to emphasize that the negotiation of documents through a bank was an ancillary activity for realizing the price of goods and did not constitute carrying on business in U.P. The court ruled in favor of the assessee on this issue as well.

In summary, the court answered the first question in the negative, in favor of the assessee, and deemed the remaining questions of academic importance. The court awarded costs to the assessee and assessed the fee of the department's counsel accordingly.