1971 (10) TMI 96 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Determination of whether the sales of timber by the assessee-dealer were in the course of inter-State trade or commerce.
2. Applicability of tax exemption under Section 4 of the Bihar Sales Tax Act, 1959.
3. Interpretation of Section 3 of the Central Sales Tax Act, 1956, regarding inter-State trade.
4. Evaluation of the Tribunal's findings and whether they justify the conclusion of inter-State trade.

Issue-Wise Detailed Analysis:

1. Determination of whether the sales of timber by the assessee-dealer were in the course of inter-State trade or commerce:

The Tribunal found several undisputed facts: the assessee was a registered dealer in Bihar, the purchaser was a registered dealer in West Bengal, orders were placed by phone, and the timber was transported by truck from Bihar to West Bengal. The credit memos showed the truck numbers and the destination, and the goods passed through the Chirkunda Check Post on the Bihar-Bengal border. The Tribunal concluded that the sales were in the course of inter-State trade, as the movement of goods outside the State was an integral part of the sales agreement.

2. Applicability of tax exemption under Section 4 of the Bihar Sales Tax Act, 1959:

Section 4(1) of the State Act exempts sales in the course of inter-State trade from state tax. The Tribunal applied Section 4(2), which refers to the Central Sales Tax Act, 1956, to determine when a sale is considered inter-State. The Tribunal's conclusion that the sales were inter-State meant that the assessee-dealer was exempt from state tax under Section 4.

3. Interpretation of Section 3 of the Central Sales Tax Act, 1956, regarding inter-State trade:

Section 3 of the Central Act states that a sale is inter-State if it occasions the movement of goods from one State to another or involves the transfer of documents of title during such movement. The Tribunal applied this section and found that the sales met the criteria for inter-State trade because the movement of goods from Bihar to West Bengal was an integral part of the sales agreement.

4. Evaluation of the Tribunal's findings and whether they justify the conclusion of inter-State trade:

The Tribunal's findings were based on the facts that the sales involved the movement of goods across state borders, and the credit memos and 'C' form declarations supported this. The Tribunal inferred that there was a common intention and obligation to transport the goods outside the State, which justified the conclusion of inter-State trade. The High Court agreed with the Tribunal's findings and reasoning, noting that the necessary ingredients for inter-State trade were present, and no supplementary statement was needed.

Conclusion:

The High Court answered the questions in the affirmative, agreeing with the Tribunal's conclusion that the sales were in the course of inter-State trade and thus exempt from state tax under the Bihar Sales Tax Act, 1959. The assessee-dealer was entitled to costs, and the hearing fee was assessed at Rs. 250. The judgment highlighted the importance of the integrated nature of the sales and the movement of goods across state borders in determining inter-State trade.