1992 (2) TMI 351 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of sales as inter-State trade and commerce based on movement of goods.
Validity of D forms issued for sales to other State Governments.

Analysis:
The case involved a dispute regarding the classification of sales by a dealer of automobile parts to State Governments as inter-State trade and commerce. The Tribunal considered whether the movement of goods from one State to another was occasioned by the sale, which is crucial in determining the nature of the transaction. The dealer sold auto parts to Himachal Pradesh and Haryana Governments, where the parts were fitted in vehicles in Delhi and then transported back to the respective States. The Tribunal relied on Supreme Court decisions to establish that if the sale triggers the movement of goods across States, it qualifies as an inter-State sale regardless of where the property in the goods passes.

The Commissioner of Sales Tax challenged the Tribunal's decision, arguing that the sale was completed in Delhi when the parts were fixed in the vehicles, and there was no written agreement for the movement of goods. Reference was made to a previous case involving vanaspati ghee supply to Jammu and Kashmir, where the absence of a written agreement specifying the movement of goods led to the sales not being treated as inter-State sales. However, the Court distinguished this case by highlighting that in the present matter, the approval of goods by the State departments outside Delhi was crucial before the sale price was received, indicating the movement of goods from Delhi to other States.

The Court emphasized that a contract can be verbal and terms may be implied, not necessarily requiring a written agreement for the movement of goods to be established. In this case, the verbal contract between the dealer and the departments outside Delhi, where goods were fixed in vehicles and transported back after approval, demonstrated the movement of goods across States. The Court concluded that the sales in question were indeed inter-State sales as the movement of goods was incidental to the sale and an implied term of the transaction. Consequently, the Tribunal's decision in favor of the dealer was upheld, and the reference was answered in the affirmative, rejecting the Revenue's contention.