1974 (4) TMI 85 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of turnover for inter-State sales under U.P. Sales Tax Act for years 1958-59 and 1959-60.

Analysis:
The judgment pertains to references under section 11 of the U.P. Sales Tax Act regarding the assessment of a company's turnover for inter-State sales. The company claimed that a part of its turnover was from goods sold during inter-State trade and thus not taxable under the U.P. Sales Tax Act. The sales tax authorities, based on a partner's statement and citing precedent, concluded that subsequent export of goods by purchasers did not convert sales into inter-State sales. The key legal question was whether the sales constituted inter-State trade.

The counsel for the company relied on section 3 of the Central Sales Tax Act, arguing that the movement of goods from one state to another occurred immediately after the sale, indicating inter-State sales. Reference was made to the Supreme Court's ruling in M/s K.G. Khosla and Co. v. Deputy Commissioner, emphasizing that the movement of goods must be an integral part of the contract for sales to be considered inter-State. However, the company failed to provide evidence regarding the contract nature with purchasers, and as delivery was made at Firozabad, the court held that no movement of goods between states was occasioned by the sales.

Ultimately, the court answered the question against the company, upholding the authorities' decision to treat the sales as intra-State and taxable under the U.P. Sales Tax Act. The Commissioner of Sales Tax was awarded costs, and the reference was answered in the negative.