1971 (9) TMI 172 - HC - VAT and Sales Tax

Summary

Issues:
1. Jurisdiction of the Sales Tax Officer, Lucknow to impose tax on inter-State sales.
2. Interpretation of provisions under the Central Sales Tax Act regarding liability to pay tax on subsequent sales.
3. Determining the appropriate State for levy and collection of tax on inter-State sales.
4. Application of the proviso to section 9(1) of the Act in the context of registered dealers.
5. Jurisdiction of the Sales Tax Officer, Lucknow in assessing tax on subsequent sales.

Detailed Analysis:

1. The main issue in this case was the jurisdiction of the Sales Tax Officer, Lucknow to impose tax on inter-State sales. The petitioners challenged the jurisdiction of the Sales Tax Officer, arguing that since the movement of goods started from Bihar, the tax should be assessed in Bihar. The court held that under section 9(1) of the Act, the State where the movement of goods commences has the authority to levy and collect the tax. As the goods originated from Bihar, the sales tax authorities in Bihar should have made the imposition, not the Sales Tax Officer in Lucknow.

2. The interpretation of provisions under the Central Sales Tax Act regarding liability to pay tax on subsequent sales was also a crucial aspect of the judgment. The court clarified that every dealer is liable to pay tax on inter-State sales under section 6 of the Act. The argument that only registered dealers are liable for tax on subsequent sales was deemed invalid. The court emphasized that the liability to pay tax on inter-State sales arises from section 6, and the proviso to section 9(1) does not absolve unregistered dealers from tax liability.

3. The determination of the appropriate State for levy and collection of tax on inter-State sales was another significant issue. The court pointed out that as per section 9(1) of the Act, the State where the movement of goods commences is responsible for levying and collecting the tax. In this case, since the goods started moving from Bihar, the sales tax authorities in Bihar had jurisdiction to impose the tax.

4. The application of the proviso to section 9(1) of the Act in the context of registered dealers was also discussed. The court rejected the argument that the proviso applied to dealers who should have obtained registration, not just those who were registered. It was clarified that there is no provision in the Act deeming all dealers, whether registered or not, as "registered dealers."

5. Lastly, the jurisdiction of the Sales Tax Officer, Lucknow in assessing tax on subsequent sales was challenged. The court dismissed the argument that a fresh movement of goods occurred during the second sale, giving jurisdiction to the Sales Tax Officer in Lucknow. It was held that if the goods were in the State during the second sale, they would be taxable under the U.P. Sales Tax Act, not the Central Sales Tax Act. Therefore, the Sales Tax Officer in Lucknow had no jurisdiction to proceed under the Central Sales Tax Act.

In conclusion, the court granted relief to the petitioners, quashing the assessment order and restraining the respondents from recovering the assessed amount. The judgment highlighted the importance of jurisdictional considerations and the correct interpretation of tax liability provisions under the Central Sales Tax Act.