1984 (11) TMI 302 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the invoices in question represented sales.
2. Whether the transactions were inter-State sales not liable to tax under the Bombay Sales Tax Act, 1959.

Detailed Analysis:

Issue 1: Whether the invoices in question represented sales.

The respondents, M/s. Dalatram Rameshwarlal, contended before the Sales Tax Officer that the invoices did not represent any sales made by them to Bharat Barrel and Drum Manufacturing Company Pvt. Ltd. This contention was rejected by the Sales Tax Officer and subsequently by the Assistant Commissioner of Sales Tax. The Tribunal, however, accepted this contention, holding that the seven invoices for a total sum of Rs. 2,36,544.14 did not represent any transactions of sale.

To determine this issue, the court examined the facts pertaining to the disputed transaction. The respondents had entered into a contract with Bharat Barrel and Drum Manufacturing Company Pvt. Ltd. for the supply of 8,000 barrels at Rs. 48 per barrel, with a rebate of Rs. 6 per barrel if a quota certificate for steel sheets was obtained in favor of Bharat Barrel. The respondents used these barrels for exporting castor oil but did not obtain the quota certificate as stipulated. Instead, they directed Hindustan Steel Ltd. to supply the steel under the quota to Bharat Barrel, who then issued debit notes to the respondents.

The court noted that a transaction of sale requires a transfer of title to the goods for money consideration. The original contract involved two separate transactions: the sale of barrels and the entitlement to a rebate if a quota certificate was obtained. The respondents transferred the steel obtained under the quota certificate to Bharat Barrel at cost, not as a sale but to claim the rebate. The court concluded that there was no transfer of quota rights and that the transaction was not a sale.

The court rejected the argument that the respondents were merely agents or trustees for Bharat Barrel in obtaining the steel. The suppliers, Hindustan Steel Ltd., supplied the goods based on the order placed by the respondents, who were the quota holders. Bharat Barrel acted on behalf of the respondents, not as purchasers. The court held that the transaction was a sale, as evidenced by the debit notes and journal entries, and that the form and substance of the transaction indicated it was a sale.

Issue 2: Whether the transactions were inter-State sales not liable to tax under the Bombay Sales Tax Act, 1959.

The Assistant Commissioner of Sales Tax initially rejected the contention that the transactions were inter-State sales due to a lack of evidence. Upon remand, the Assistant Commissioner examined the evidence and held that the sales were not in the course of inter-State trade and commerce. The Tribunal did not find it necessary to decide on this contention after accepting the first contention that the invoices did not represent sales.

The court did not delve deeply into this issue, as it was rendered moot by the finding that the transactions were sales. The primary focus was on whether the invoices represented sales, and the court's decision on this matter negated the need to address the inter-State sales contention in detail.

Conclusion:

The court concluded that the seven invoices dated 12th July, 1968, for the total amount of Rs. 2,36,544.14 did represent sales by the assessee to Bharat Barrel and Drum Manufacturing Company Pvt. Ltd. The question was answered in the negative and against the assessee. The respondents were ordered to pay the applicants' costs of the reference. The court also noted that other points urged by the assessee before the Tribunal, which were not decided, could be raised again when the reference goes back before the Tribunal.