1992 (9) TMI 324 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of Section 6(2) of the Central Sales Tax Act, 1956.
2. Determination of whether the sales in question were inter-State or intra-State.
3. Validity of the Tribunal's decision exempting the turnover from tax.
4. Interpretation of "documents of title to goods" under Section 2(4) of the Sale of Goods Act, 1930.
5. Determination of the point at which the movement of goods terminates.

Detailed Analysis:

1. Applicability of Section 6(2) of the Central Sales Tax Act, 1956:
The primary issue was whether the turnover in question qualified for exemption under Section 6(2) of the Central Sales Tax Act, 1956. Section 6(2) grants exemption to subsequent inter-State sales effected by transfer of documents of title to goods during their movement from one State to another. The Tribunal had held that the turnover was an inter-State sale under Section 6(2) and thus exempt from tax. However, the Revenue contended that the sales were intra-State, taxable under the Tamil Nadu General Sales Tax Act, 1959, as the movement of goods terminated in Tamil Nadu.

2. Determination of whether the sales in question were inter-State or intra-State:
The Tribunal found that the sales were inter-State, effected during the movement of goods from one State to another. The Revenue argued that the goods' movement ended in Tamil Nadu, making the sales intra-State. The High Court examined the facts and concluded that the movement of goods terminated in Coimbatore, Tamil Nadu, where notional deliveries were made, and subsequent sales by the assessees were intra-State.

3. Validity of the Tribunal's decision exempting the turnover from tax:
The Tribunal had exempted the turnover from tax, interpreting the sales as inter-State under Section 6(2). The High Court found that the Tribunal erred in its interpretation, as the sales were intra-State, taxable under the State Act. The High Court set aside the Tribunal's order and restored the revised assessment by the Revenue.

4. Interpretation of "documents of title to goods" under Section 2(4) of the Sale of Goods Act, 1930:
The High Court scrutinized whether the documents used by the assessees qualified as "documents of title to goods" under Section 2(4) of the Sale of Goods Act, 1930. The Tribunal had accepted delivery notes, authorisation letters, and invoices as documents of title. The High Court disagreed, stating that these documents did not meet the definition under Section 2(4), which includes documents like a bill of lading, dock-warrant, warehouse-keeper's certificate, etc. The Court emphasized that the original lorry receipts, which were documents of title, were not transferred to the purchasers.

5. Determination of the point at which the movement of goods terminates:
The High Court analyzed the point at which the movement of goods terminated. According to Explanation 1 to Section 3(b) of the Central Act, the movement of goods terminates when delivery is taken from the carrier. The High Court concluded that the movement ended in Coimbatore, where notional deliveries were made, not at the purchasers' places in Tamil Nadu. Consequently, the subsequent sales were intra-State, not inter-State.

Conclusion:
The High Court set aside the Tribunal's order, restored the revised assessment by the Revenue, and held that the sales in question were intra-State, taxable under the Tamil Nadu General Sales Tax Act, 1959. The Court emphasized the proper interpretation of "documents of title to goods" and the point of termination of goods' movement, concluding that the assessees were not entitled to exemption under Section 6(2) of the Central Sales Tax Act, 1956. The petitions by the Revenue were allowed, with no order as to costs.