1979 (12) TMI 145 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Commercial Tax Officer of Malda, West Bengal to assess sales tax under the Bengal Finance (Sales Tax) Act, 1941.
2. Determination of whether the sale was an inter-State sale under Section 3(a) of the Central Sales Tax Act, 1956.
3. Validity of the orders contained in annexures 11 and 12.
4. Jurisdiction of the Patna High Court to entertain the writ application.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commercial Tax Officer of Malda, West Bengal:
The petitioners challenged the notice and order issued by the Commercial Tax Officer of Malda, West Bengal, under the Bengal Finance (Sales Tax) Act, 1941. The petitioners argued that the Commercial Tax Officer lacked the jurisdiction to assess sales tax on transactions that were inter-State sales, as defined under Section 3(a) of the Central Sales Tax Act, 1956. The court examined the facts and held that the movement of goods from Bihar to West Bengal was occasioned by a contract and was incidental to the sale. Therefore, the sale was inter-State, and the jurisdiction to levy sales tax lay with the State of Bihar, not West Bengal.

2. Determination of Inter-State Sale:
The court analyzed whether the sale of stone boulders from Bihar to West Bengal constituted an inter-State sale under Section 3(a) of the Central Sales Tax Act, 1956. The petitioners contended that the sale was inter-State as the goods were transported from Bihar to West Bengal under a contract. The court agreed, stating that the movement of goods was occasioned by the contract and the sale was completed in Bihar. The court referenced the case of Oil India Ltd. v. Superintendent of Taxes, where the movement of goods from one state to another, as a result of a contract, was held to be an inter-State sale.

3. Validity of Orders in Annexures 11 and 12:
The petitioners argued that the orders contained in annexures 11 and 12 were illegal as they encroached upon the provisions of the Central Sales Tax Act, 1956. The court found that the orders issued by the Commercial Tax Officer of Malda were invalid as they attempted to levy tax on an inter-State sale, which was beyond the jurisdiction of the Bengal Act. Consequently, the court quashed the orders in annexures 11 and 12, declaring them void.

4. Jurisdiction of Patna High Court:
The respondents contended that the Patna High Court lacked jurisdiction to entertain the writ application as the cause of action arose in West Bengal. The petitioners countered that their business was based in Bihar, and all relevant notices and orders were addressed to their Bihar address. The court upheld the petitioners' argument, stating that the cause of action arose in Bihar, and thus, the Patna High Court had jurisdiction to hear the case. The court referenced the decision in Veeri Chettiar v. Sales Tax Officer, Bombay, to support its conclusion.

Conclusion:
The court concluded that the movement of goods was occasioned by a contract, making it an inter-State sale under Section 3(a) of the Central Sales Tax Act, 1956. Therefore, the jurisdiction to levy sales tax lay with the State of Bihar, not West Bengal. The orders contained in annexures 11 and 12 were quashed, and the court held that the Patna High Court had jurisdiction to entertain the writ application. The judgment was agreed upon by both judges, and no order as to costs was passed.