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2009 (2) TMI 753 - HC - VAT and Sales TaxWhether, on facts and circumstances, the nature of transaction is inter-State sales terminating at the hands of Shri Muni Lal or at the hands of M/s. Dada Motor Garage physically in reality who appropriates the goods and passes the same to the customers after getting the amount, giving the receipts, the statement of collection, keeping watch (responsibility of shortage, damage or any such loss), carrying out sheltering and service at Jalandhar at the hands and premises of Dada Motor Garage? Whether evidence on the file does not reveal that the contract of appropriation was between M/s. Dada Motor Garage and Lohia Machines Limited, Kanpur and subsequently, M/s. Dada Motor Garage sold/delivered such goods at its premises at Jalandhar? Whether M/s. Dada Motor Garage is engaged in inter-State transaction, thereby covering the present case under the PGST Act, 1948? Held that - If the transaction of sale stands completed within the State and the movement of goods takes place thereafter, it would obviously be independent of contract of sale and necessarily by or on behalf of the purchaser alone, which would not have any inter-State element. Therefore, there is no doubt left that the sale in the present case is inter-State sale within the meaning of section 3 of the CST Act. Thus, the first question of law is answered against the Revenue and in favour of the assessee. The answer to the second question would also be against the Revenue and in favour of the assessee because there is no evidence on record to prove a contract of appropriation between the company at Kanpur and the assessee, Dada Motors, who might have sold the goods at their premises at Jalandhar. None of those circumstances are present in the instant case nor there are any such findings available on record for us to conclude that the delivery of goods was given to the Dada Motors in pursuance to the contract of appropriation.Therefore, the third question is also answered against the Revenue and in favour of the assessee.
Issues Involved:
1. Nature of the transaction: whether it constitutes inter-State sales. 2. Evidence of contract of appropriation between the company and the assessee. 3. Applicability of inter-State transaction provisions under the PGST Act, 1948, considering the Supreme Court's verdict in Madras Marine and Co. v. State of Madras. Detailed Analysis: Issue 1: Nature of the Transaction The court examined whether the transaction was an inter-State sale terminating at the hands of Shri Muni Lal or M/s. Dada Motor Garage. The Tribunal found that the correspondence regarding the purchase and sale of the scooter was between Shri Muni Lal of Jalandhar and Lohia Machines Ltd., Kanpur. The price charged was ex-factory at Kanpur, not ex-showroom at Jalandhar, indicating the transaction was a composite nature sale at the factory gate. The court concluded that all essential ingredients of an inter-State sale were present: 1. A contract of sale existed between Shri Muni Lal and the company. 2. The goods moved from Kanpur to Jalandhar pursuant to this contract. 3. The sale concluded with the delivery of goods at Jalandhar. Issue 2: Evidence of Contract of Appropriation The Tribunal found no evidence of a contract of appropriation between the company and the assessee, Dada Motors, for selling goods at Jalandhar. The documents and the sequence of events showed that the scooter was dispatched directly from Kanpur to the customer, Shri Muni Lal, without any intermediary sale or appropriation by Dada Motors. Thus, the second question was answered against the Revenue, affirming that the transaction was directly between the company and the customer. Issue 3: Applicability of Inter-State Transaction Provisions The court considered the Supreme Court's judgment in Madras Marine and Co. v. State of Madras, which emphasized the place of delivery for sales tax purposes. The court distinguished the present case by noting that the sale took place at the factory gate in Kanpur, not at the showroom in Jalandhar. The Tribunal's findings indicated that no handling charges were paid to Dada Motors by Shri Muni Lal, and the price was ex-factory. The court concluded that the facts of the present case did not match those in Madras Marine and Co., where appropriation occurred in a bonded warehouse within the State. Therefore, the third question was also answered against the Revenue, affirming the inter-State nature of the sale. Conclusion All three questions of law were answered against the Revenue and in favor of the assessee. The court held that the transaction in question was an inter-State sale, there was no contract of appropriation involving the assessee, and the principles from Madras Marine and Co. did not apply to alter this conclusion.
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