1991 (2) TMI 365 - HC - VAT and Sales Tax

Summary

Issues:
Jurisdiction of State of Gujarat to levy Central sales tax on subsequent sales.

Analysis:
The case involved a dispute regarding the jurisdiction of the State of Gujarat to levy Central sales tax on subsequent sales made by a dealer in petroleum products. The opponent, a registered dealer in both Maharashtra and Gujarat under the Central Sales Tax Act, had purchased goods in Gujarat and then made subsequent sales in Maharashtra. The opponent had obtained "C" forms from Maharashtra for the purchase. The crux of the issue was whether the State of Gujarat had the authority to levy and collect tax on these subsequent sales.

The Sales Tax Officer initially imposed tax and penalty on the opponent's turnover of disputed sales, contending that Gujarat had the jurisdiction to collect the tax. The Assistant Commissioner and the Tribunal upheld this decision. However, the opponent argued that as a registered dealer under the Central Act, the proviso to section 9(1) applied, and therefore, only Maharashtra had the authority to levy the tax on the subsequent sales.

The Court analyzed the provisions of the Central Sales Tax Act, particularly section 9(1) and the proviso, which stipulates that tax shall be levied in the State from which the dealer obtained or could have obtained the necessary forms for the purchase of goods. The Court noted that the opponent had obtained the required forms from Maharashtra, and the subsequent sales were not exempt under section 6(2) of the Act. Therefore, the proviso to section 9(1) applied, granting jurisdiction to Maharashtra for tax collection.

The Court dismissed the State of Gujarat's appeal, emphasizing that the necessary forms were obtained from Maharashtra, and Gujarat had no jurisdiction to levy the tax. The Court referenced a Supreme Court decision to support its interpretation of the proviso. Ultimately, the Court ruled in favor of the opponent, stating that the levy of tax and penalty by Gujarat was without jurisdiction and illegal. The question of law was answered in the affirmative, in favor of the assessee against the State department.

In conclusion, the judgment clarified the application of the proviso to section 9(1) of the Central Sales Tax Act, determining the jurisdiction for tax collection on subsequent sales based on where the necessary forms were obtained. The decision highlighted the importance of compliance with statutory provisions and upheld the principle of jurisdictional authority in tax matters.