1984 (2) TMI 312 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of sales tax laws for intra-State and inter-State sales involving the transportation of chicks from Haryana to Delhi based on pre-existing contracts.

Detailed Analysis:

1. Facts and Background:
The case involves a partnership concern maintaining a poultry farm in Haryana, rearing chickens for egg production, and transporting chicks to Delhi for sale to customers. The Assessing Authority imposed sales tax under the Punjab General Sales Tax Act, 1948, and the Central Sales Tax Act, 1956, for intra-State and inter-State sales, respectively. Appeals were made to higher authorities, leading to references to the High Court.

2. Questions Referred:
The Tribunal referred two questions for the High Court's opinion:
a. Whether the movement of chicks from Haryana to Delhi constituted a contract of sale?
b. Whether the goods were appropriated to the contract of sale in Delhi, determining the tax liability?

3. Tribunal's Findings:
The Tribunal concluded that the chicks were transported based on pre-existing orders, with 10% advance payment received in Haryana and the remaining 90% on delivery in Delhi. The chicks were sent directly to customers in Delhi or to Delhi railway station for onward dispatch, indicating a contractual relationship between the parties.

4. Legal Arguments:
The counsel for the assessee relied on Supreme Court decisions emphasizing that property in goods passed in Delhi, arguing against the imposition of inter-State sales tax. In contrast, the State of Haryana's counsel cited precedents stating that movement of goods due to a covenant in the contract constituted inter-State sales.

5. Judgment and Analysis:
The High Court distinguished the cases cited by both parties and found the State's arguments more applicable. Citing Supreme Court judgments, the Court held that movement of goods due to a contractual obligation, even if property passed in a different state, constituted inter-State sales. The Court ruled in favor of the State, upholding the imposition of sales tax on the movement of chicks from Haryana to Delhi.

6. Conclusion:
The High Court answered both questions in favor of the State of Haryana, affirming the Tribunal's findings. The writ petition was dismissed, and each party was directed to bear its own costs. The judgment clarified the application of sales tax laws to transactions involving the transportation of goods across states based on pre-existing contracts.