1991 (6) TMI 235 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the second sale between the opponent-assessee and the purchasers at Surat and Ahmedabad should be considered as inter-State sale or local sale.
2. Whether the Tribunal was correct in holding that the sale by the opponent to the purchasers in the State of Gujarat was an inter-State sale under the Central Sales Tax Act, 1956.

Analysis:
The case involved a reference under section 69 of the Gujarat Sales Tax Act, 1969, regarding the assessment period from April 1, 1973, to March 31, 1976. The opponent-assessee, a registered dealer, distributed carbon dioxide from a Bombay supplier to purchasers in Gujarat. The dispute arose over whether the second sale to purchasers in Surat and Ahmedabad should be considered inter-State or local sales for tax purposes. The Assistant Commissioner initially considered them local sales, leading to a revision application by the opponent-assessee. The Tribunal later deemed the second sale as inter-State sales under section 3(b) of the Central Sales Tax Act, 1956.

The Tribunal's decision was based on the concept of two separate sales - one between the opponent-assessee and the Bombay supplier, and the second between the opponent-assessee and the purchasers. The Tribunal concluded that the second sale was an inter-State sale as the property in the goods transferred to the purchasers during transport, supported by the issuance of transport receipts in the purchasers' names. This transfer of documents constituted a sale by transfer of title, even though the actual documents were not endorsed by the opponent-assessee.

The Tribunal's reasoning aligned with a Supreme Court decision involving similar circumstances, emphasizing the synchronization of deliveries to different parties. The High Court agreed with the Tribunal's interpretation, emphasizing that the property in the goods transferred to the purchasers during transport, justifying the classification as an inter-State sale under section 3(b) of the Central Sales Tax Act, 1956. The Court rejected the Revenue's argument that physical border crossing was necessary for an inter-State sale, citing legal precedent that permits simultaneous sales in inter-State trade.

Ultimately, the High Court upheld the Tribunal's decision, ruling in favor of the opponent-assessee. The Court's detailed analysis affirmed that the second sale between the opponent and the purchasers in Gujarat qualified as an inter-State sale under the Central Sales Tax Act, 1956, rather than a local sale taxable under the Gujarat Sales Tax Act, 1969.