1998 (1) TMI 505 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the goods were sold to the Government or the E.S.I. corporation.
2. Validity of the "D" form signed by the Director of Medical and Health Services.
3. Interpretation of Section 8(4)(b) of the Central Sales Tax Act, 1956.

Analysis:
1. The main issue in this case was determining whether the goods were sold to the Government or the E.S.I. corporation. The assessee, a manufacturer of medicines, supplied medicines to the E.S.I. hospitals as per an order from the Director of Medical and Health Services of the Government. The payment for the goods was made by the Government under the E.S.I. Scheme. The Joint Commissioner argued that the E.S.I. corporation was a separate entity and not a department of the Government, therefore the sale was not to the Government. However, the Court found that the Government was the buyer as it had directed the supplies and made the payment, establishing itself as the buyer of the goods.

2. The validity of the "D" form signed by the Director of Medical and Health Services was also a crucial issue. Section 8(4)(b) of the Central Sales Tax Act, 1956 required a certificate in the prescribed form duly filled and signed by an authorized officer of the Government for sales to the Government. The Joint Commissioner had held that the form was not signed by an authorized officer of the Government as the officer's designation included "E.S.I. Scheme." However, the Court determined that the Director of Medical Services, who signed the form, was an officer of the Government, and the form met the statutory requirements.

3. The interpretation of Section 8(4)(b) of the Act was essential in resolving the issues. The provision required a certificate signed by an authorized officer of the Government for sales to the Government. The Court emphasized that the delivery of goods to a third party, in this case, the E.S.I. hospitals, did not change the fact that the Government was the buyer. The Government's payment for the goods and its accounting under the E.S.I. Scheme did not negate its status as the buyer. Therefore, the Court held that the Government was the buyer, and the "D" form signed by the Director of Medical Services was valid.

In conclusion, the Court allowed the appeals, ruling in favor of the assessee, as it established that the goods were sold to the Government, and the "D" form signed by the Director of Medical and Health Services met the legal requirements for sales to the Government under the Central Sales Tax Act.