1988 (9) TMI 323 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of sale of gunny bags in the course of inter-State trade and commerce.
2. Taxability of inter-State sales of gur.

Analysis:

Issue 1: Taxability of sale of gunny bags in the course of inter-State trade and commerce.
The case involved the assessment of Central sales tax on the sale of gunny bags by the assessee, who acted as a purchasing agent for ex-U.P. principals. The assessing authority treated the transaction of supplying gunny bags as a sale in the course of inter-State trade and commerce. The Tribunal upheld this assessment based on the following conclusions:
- Separate price for gunny bags was charged with commission, and a separate account was maintained for their purchase and sale.
- The gunny bags were purchased by the dealer in his own account, not on behalf of the ex-U.P. principals.
- The bags were not intended to be returned, and there was no written purchase order available.
- While no written agreement existed, an implied contract was found between the parties for the supply of gunny bags.
The Tribunal held that the transaction fell under the purview of the Central Sales Tax Act, similar to a previous case involving a similar scenario. The Court concurred with the Tribunal's findings, stating that the assessee was liable to pay Central sales tax on the sale of gunny bags. The argument that commission on gunny bags made it incidental to the purchasing agency was rejected.

Issue 2: Taxability of inter-State sales of gur.
The second dispute revolved around the taxability of inter-State sales of gur by the assessee to U.P. principals. The Tribunal concluded that the assessee charged selling commission from U.P. principals, making it a sale, whether in U.P. or inter-State. The Tribunal found discrepancies in the documentation and actions of the assessee, leading to the conclusion that the sales were made in the course of inter-State trade. The Court upheld the Tribunal's decision, stating that there was no error in the findings related to the dispute of the sale of gur. The revision petition was dismissed, and the Court vacated the stay order.

In summary, the judgment addressed the taxability of sales involving gunny bags and gur in the context of inter-State trade and commerce, emphasizing the presence of implied contracts and the charging of commissions as key factors in determining liability under the Central Sales Tax Act.