2007 (7) TMI 605 - HC - VAT and Sales Tax

Summary

Issues involved: The judgment involves the interpretation of the provisions of the Central Sales Tax Act, 1956 regarding the tax liability on sales made by an assessee to dealers in different states, as well as the obligation of the dealers to move goods outside the state of Delhi.

Interpretation of Central Sales Tax Act:
The court addressed three questions of law referred by the Sales Tax Appellate Tribunal. The first question concerned whether sales made to specific dealers were in the course of inter-State trade or commerce. The court answered this question affirmatively, stating that the sales attracted Central sales tax. The second question, regarding the onus of proof on the petitioner-dealer, was not pressed and therefore not answered. The third question became irrelevant as the Tribunal had already granted the assessee an opportunity to furnish necessary declarations.

Facts of the Case:
The assessee sold chemicals in Delhi to distributors for sale in other states. The Tribunal concluded that these sales were inter-State transactions, attracting Central sales tax. The dealers were obligated to move the goods outside Delhi as per the terms of the contract, and failure to do so resulted in penalties.

Legal Analysis:
The court referred to Supreme Court judgments to establish that sales are considered inter-State when goods are required to be moved to another state as part of the contract. The terms of the contract between the assessee and the dealers clearly indicated that goods were to be transported outside Delhi, making the sales inter-State transactions.

Application of Central Sales Tax Act:
The court analyzed Section 3 of the Central Sales Tax Act, emphasizing that a sale is deemed inter-State if it occasions the movement of goods from one state to another. The court cited previous Supreme Court decisions to support the interpretation that the movement of goods must be a result of the contract of sale to qualify as an inter-State sale.

Conclusion:
The court ruled in favor of the Revenue, affirming that the sales made by the assessee to its dealers were inter-State transactions liable for Central sales tax. The assessee was given the opportunity to provide evidence to show that certain goods were locally sold, and further proceedings were scheduled before the assessing authority.

Disposition of References:
All references were disposed of based on the judgment in the primary case, providing clarity on the tax liability of the assessee for inter-State sales made to its dealers.