1992 (9) TMI 325 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of inter-State sales under the Bihar Sales Tax Ordinance, 1979.

Analysis:
The judgment by the Patna High Court involved five references under section 33(1) of the Bihar Sales Tax Ordinance, 1979. The main questions of law revolved around whether sales resulting in delivery to customers in West Bengal by the petitioner's vans were considered as sales that occasioned the movement of materials from one State to another. The Tribunal had to determine if adverse inferences against the petitioner were justified and if the petitioner was liable to pay tax in Bihar on transactions deemed as inter-State sales. The references pertained to the same assessee for the periods 1966-67 to 1970-71.

The relevant facts established that the assessee, a public limited company, engaged in the manufacture and sale of explosives with its factory in Bihar and magazines in other states, including West Bengal. Sales were made from both the factory and magazines, with some sales involving transportation from Bihar to West Bengal. The assessing officer deemed these sales as inter-State, leading to a tax liability. Despite the lack of specific contractual obligations regarding the movement of goods, the Tribunal inferred an implied contract based on the conduct of the parties and the transportation arrangements.

The petitioner argued that without explicit contractual obligations for inter-State movement, the sales should not be categorized as inter-State. However, the Tribunal relied on precedents and circumstances to support its inference of an implied contract. Citing relevant case laws, the petitioner's counsel emphasized the necessity of establishing the movement of goods as an obligation in the contract for sales to be considered inter-State. Conversely, the State's advocate highlighted Supreme Court decisions that affirmed inter-State sales even without explicit contractual provisions for movement.

Ultimately, the Court agreed with the State's position, citing Supreme Court rulings that emphasized the movement of goods as the decisive factor for categorizing sales as inter-State. The judgment concluded that the transactions in question, involving sales from Bihar to West Bengal, constituted inter-State sales under the Central Act. Consequently, the first question was answered in favor of the Revenue, with questions two and three deemed inconsequential. The Court also awarded costs to be paid by the assessee within a specified timeframe.

In a separate judgment, Justice Chattopadhyaya concurred with the decision, and the reference was answered in the affirmative.