1975 (3) TMI 109 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of depot sales vs. inter-State sales under the Central Sales Tax Act.

Analysis:
The appellant, a yarn manufacturing company, claimed exemption on sales through alleged depots in other States, contending they were depot sales, not inter-State sales. Despite initial acceptance by the joint Commercial Tax Officer, subsequent investigations led the Board of Revenue to conclude that the transactions were inter-State sales. The appellant appealed, arguing the transactions were depot sales. The court examined a specific transaction and held that the goods were despatched in pursuance of an order from an out-of-State purchaser through the appellant's depot keeper, constituting an inter-State sale. Citing precedents, the court emphasized that the movement of goods as a result of a contract with an identifiable buyer signifies an inter-State sale, irrespective of intermediary involvement.

The court rejected the appellant's argument that the goods being consigned as "self" allowed for diversion, thus negating inter-State sale status. Emphasizing that evidence of goods moving in line with a contract for delivery to the purchaser determines inter-State sale status, the court disregarded the consignee designation as "self." The appellant's claim of appropriation only at the Bombay depot to avoid sales tax imposition was dismissed, as the court found clear intent to deliver goods to out-of-State purchasers based on specific orders, indicating appropriation within the State.

Ultimately, the court upheld the Board of Revenue's order, dismissing the appeal and awarding costs to the respondent. The judgment reaffirmed that the nature of transactions, evidenced by contract adherence and intent to deliver to out-of-State buyers, determines inter-State sale liability under the Central Sales Tax Act.