1986 (12) TMI 340 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of whether the sale of generating sets on foundation at Jaipur amounted to an inter-State sale.

Analysis:
The judgment pertains to a revision under section 15 of the Rajasthan Sales Tax Act, 1954, as amended by the Rajasthan Sales Tax (Amendment) Act, 1984. The Tribunal had referred a question of law to the High Court regarding the nature of a sale transaction involving two generating sets. The primary issue was whether the sale of these sets at Jaipur, which were later moved to Bombay by the buyer, constituted an inter-State sale. The revision was necessitated due to the amendment in the Act, replacing the reference mechanism with a revision process. The assessee contended that the transaction should be considered an inter-State sale eligible for concessional tax rates. The assessing authority and appellate authority had rejected this claim, but the Board of Revenue accepted it, leading to the reference to the High Court for a decision.

The judgment delves into the legal principles governing inter-State sales, emphasizing that the movement of goods across state borders must be connected to the contract itself to qualify as an inter-State sale. The court highlighted that the seller's involvement in the inter-State movement, either through an explicit or implicit covenant in the contract, is crucial. In this case, the court found that the sale transaction was completed at Jaipur, and the seller had no further obligations once the machinery was delivered to the buyer. The court rejected the argument that the seller's knowledge of the goods being moved to Bombay by the buyer constituted an incident of the contract. Citing various precedents, including Supreme Court decisions, the court concluded that the sale did not meet the criteria for an inter-State sale as the seller's association with the inter-State movement was lacking.

Ultimately, the court allowed the revision, overturning the Board of Revenue's decision and ruling that the sale of the generating sets in Jaipur did not amount to an inter-State sale. The judgment emphasized the necessity of the seller's direct involvement or association with the inter-State movement to classify a sale as inter-State. The court decided in favor of the assessee, highlighting the distinction from previous cases where inter-State movement was an integral part of the contract. The judgment concluded with the allowance of the petition, with no order as to costs.