1975 (5) TMI 83 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of article 286 of the Constitution regarding sales tax exemption
- Application of section 27 of the U.P. Sales Tax Act to determine tax liability on sales
- Definition of inter-State sales under the Central Sales Tax Act
- Comparison of definitions in the Central Sales Tax Act and U.P. Sales Tax Act
- Distinguishing factors in assessing sales tax exemption eligibility

Interpretation of Article 286 of the Constitution:
The case involved a reference under section 11(4) of the U.P. Sales Tax Act concerning the exemption from tax on sales of gur consigned outside Uttar Pradesh. The dealer claimed exemption under article 286 of the Constitution, which prohibits the imposition of tax on sales outside the state or in the course of import/export. The Assistant Commissioner accepted the claim, but the Judge (Revisions) reversed the decision based on a previous court ruling. The central question was whether the sales were outside U.P. and exempt under article 286.

Application of Section 27 of the U.P. Sales Tax Act:
Section 27 of the U.P. Sales Tax Act provides exemptions for sales outside the state or in the course of inter-State trade. In this case, the goods were sold within Uttar Pradesh by transferring railway receipts to buyers, indicating that the sales did not fall under the exemptions specified in section 27. The Act prohibits tax imposition on inter-State sales post-March 31, 1951, unless specified by Parliament.

Definition of Inter-State Sales under the Central Sales Tax Act:
The judgment discussed the definition of inter-State sales under the Central Sales Tax Act, which considers sales as inter-State if they involve the movement of goods between states or transfer of title documents during transit. The Act's provisions clarify when a sale is deemed to occur during inter-State trade, emphasizing the movement of goods and transfer of documents.

Comparison of Definitions in Acts:
The court analyzed the similarity between the definition of inter-State sales in the Central Sales Tax Act and the U.P. Sales Tax Act. It concluded that the sales exempt from tax under the U.P. Sales Tax Act align with the definitions in the Central Sales Tax Act. Sales involving the transfer of railway receipts during transit between states were considered inter-State sales exempt from tax.

Distinguishing Factors in Assessing Exemption Eligibility:
The judgment distinguished the present case from a previous ruling where a similar contention was raised but not allowed. It clarified that the sales in question were indeed exempt under article 286 of the Constitution and section 27(1)(b) of the U.P. Sales Tax Act. The court awarded costs to the assessee and answered the reference accordingly, affirming the exemption eligibility for the sales in question.