1990 (10) TMI 342 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the turnover of Rs. 3,828 is exigible to tax as inter-State sales taxable by Tamil Nadu or local sales at Karnataka State.
2. Whether the turnover of Rs. 2,51,540 is a local sale in Karnataka or an inter-State sale taxable by Tamil Nadu.

Analysis:
1. The first issue pertains to T.C. (R) No. 75 of 1981 involving a turnover of Rs. 3,828. The Tribunal found that the goods moved within Karnataka due to an internal arrangement, deeming it a local sale in Karnataka. The High Court concurred with the Tribunal's decision, dismissing the case as the turnover was not exigible to tax by Tamil Nadu.

2. The second issue involves T.C. (R) No. 74 of 1981 concerning a turnover of Rs. 2,51,540. The Appellate Assistant Commissioner and the Tribunal ruled that this turnover was a local sale in Karnataka, not an inter-State sale taxable by Tamil Nadu. The case involved the Madras office producing goods for the Bangalore branch, with the goods being delivered to the buyer in Karnataka. The ownership and risk of the goods remained with the Bangalore branch until delivery to the buyer, indicating a local sale in Karnataka.

3. The Revenue argued that a precedent case should apply, where the Supreme Court held a transaction as an inter-State sale. However, the Court distinguished the present case from the precedent based on various factors. In the present case, the contract did not involve movement of goods from Tamil Nadu to Karnataka, and the Bangalore branch had the autonomy to divert goods for other purposes, unlike the intermediary role played in the precedent case.

4. The Court highlighted the differences in facts between the present case and the precedent case, emphasizing that the contract did not necessitate the movement of goods across states. As the Bangalore branch had control over the goods and the contract did not mandate movement from Tamil Nadu to Karnataka, the turnover was deemed a local sale in Karnataka. Consequently, T.C. (R) No. 74 of 1981 was dismissed, with no costs awarded due to the circumstances of the case.

5. In conclusion, both tax revision cases were dismissed, upholding the decisions that the turnovers in question were local sales in Karnataka and not subject to tax by Tamil Nadu.