1975 (2) TMI 109 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sales amounting to Rs. 64,849-7-0 had taken place outside the State of Bombay.
2. Whether there was any evidence before the majority of the Tribunal to conclude that the goods moved from the State of Bombay to Ajmer under the contract of sale.

Issue-Wise Detailed Analysis:

Issue 1: Whether the sales amounting to Rs. 64,849-7-0 had taken place outside the State of Bombay.
The primary contention was whether the sales in question occurred outside the State of Bombay. The respondents, registered dealers under the Bombay Sales Tax Act, 1953, supplied goods to the Western Railway under a contract specifying "free delivery in Bombay." However, the despatch instructions indicated that the goods were to be delivered to the Inspection Officer in Bombay for onward despatch to Ajmer. The Sales Tax Officer included the sales amount in the taxable turnover, which was contested by the respondents. The Assistant Commissioner of Sales Tax and the Deputy Commissioner of Sales Tax upheld this inclusion, but the Sales Tax Tribunal ruled that the sales did not occur within Bombay, referencing Article 286 of the Constitution of India.

The High Court examined the terms of the contract, noting that the final acceptance of goods was at Ajmer, not Bombay. The inspection in Bombay was preliminary, and the consignee at Ajmer had the right to reject the goods upon final inspection. This indicated that the sale was not complete until acceptance at Ajmer. The Court referred to the Supreme Court's decision in Bengal Timber Trading Co. Ltd. v. Commissioner of Sales Tax, which held that actual delivery is complete only upon acceptance by the consignee at the destination. Thus, the High Court concluded that the sales were not taxable by the State of Bombay.

Issue 2: Whether there was any evidence before the majority of the Tribunal to conclude that the goods moved from the State of Bombay to Ajmer under the contract of sale.
The second issue addressed whether there was evidence to support the Tribunal's conclusion that the goods moved from Bombay to Ajmer under the contract. The contract explicitly required the goods to be consigned to Ajmer. Even the dissenting Tribunal member acknowledged that the goods were sent to Ajmer after inspection in Bombay. The High Court noted that it was uncontested that the goods moved from Bombay to Ajmer and were delivered there.

The Court dismissed the argument that the respondents failed to prove the movement of goods, as the contract and uncontested facts clearly indicated such movement. Therefore, the Tribunal's conclusion was supported by sufficient evidence.

Conclusion:
The High Court answered both questions in the affirmative, affirming that the sales took place outside the State of Bombay and that there was evidence to support the movement of goods from Bombay to Ajmer under the contract. The applicant was ordered to pay the respondents' costs for the reference.