1999 (4) TMI 585 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of rum supplied to the Delhi Administration.
2. Nature of sales - whether intra-State or inter-State.
3. Interpretation of the agreements between the dealer and the Delhi Administration.
4. Relevance of Form D issued by the Delhi Administration.

Detailed Analysis:

1. Taxability of Rum Supplied to the Delhi Administration:
The primary issue in these revision petitions is the taxability of the rum supplied by the dealer to the Delhi Administration under agreements for the assessment years 1984-85, 1985-86, and 1986-87. The dealer contended that the sales were made within Delhi and thus were intra-State sales, not subject to Central Sales Tax. However, the revenue argued that the goods moved from Meerut, U.P. to Delhi in pursuance of the agreements, making them inter-State sales under Section 3(a) of the Central Sales Tax Act.

2. Nature of Sales - Intra-State or Inter-State:
The Tribunal and the revenue authorities held that the sales were inter-State as the goods moved from U.P. to Delhi due to the agreements. The dealer's argument was that the sales occurred at their Delhi depot, making them intra-State sales. The court examined the agreements and found that they did not guarantee the purchase of any specific quantity of rum by the Delhi Administration, and the dealer was required to maintain a buffer stock in Delhi. The court concluded that the movement of goods to Delhi was not in pursuance of a sale but to maintain the required stock for potential orders, thus not qualifying as inter-State sales.

3. Interpretation of the Agreements:
The agreements between the dealer and the Delhi Administration were scrutinized. The agreements granted a license to the dealer to supply rum to retail vends in Delhi, with no guaranteed purchase quantity. The dealer was required to keep a buffer stock in Delhi, and the actual sales would occur when the Delhi Administration placed orders. The court found that these agreements did not constitute a contract of sale that occasioned the movement of goods from U.P. to Delhi. The agreements were for maintaining stock in anticipation of potential orders, not for immediate sale.

4. Relevance of Form D Issued by the Delhi Administration:
The revenue argued that the issuance of Form D by the Delhi Administration indicated inter-State transactions. However, the court held that Form D only declared that purchases were made on behalf of the Government and did not specify that they were inter-State sales. Thus, the declarations in Form D could not conclude the issue against the dealer.

Conclusion:
The court allowed the revision petitions, holding that the disputed turnover was not liable to Central Sales Tax as inter-State sales. The findings of the authorities below were based on a misconception of the nature of the agreements, which did not bring about any sale or purchase. The court directed that an authenticated copy of the judgment be transmitted to the Trade Tax Tribunal for passing consequential orders in accordance with the law. Petitions allowed.