2008 (7) TMI 914 - HC - VAT and Sales Tax

Inter-State sales v/s intra-State sales - Held that - The controversy involved in the present case is governed by clause (b) of section 3 of the Central Sales Tax Act and is fully covered by the decision of the Division Bench of this court in the case of Commissioner of Sales Tax, U.P. v. Mewalal Kewal Kishore 1976 (7) TMI 146 - ALLAHABAD HIGH COURT . Viewed as above, the question raised by the Revenue is answered in its favour by holding that the transaction in question is inter-State sale, against the dealer-opposite party.

Summary

Issues involved:
Interpretation of inter-State sales under the U.P. Trade Tax Act, 1948 based on the Central Sales Tax Act, 1956.

Analysis:

Issue 1: Identification of the nature of the transaction
The case involved a dispute regarding whether the transactions in question were inter-State sales or intra-State sales. The dealer claimed that the goods were sold locally but sent outside the state through railway receipts. The assessing authority found that the transaction fell under section 3(b) of the Central Sales Tax Act, as the railway receipts were prepared in the dealer's name and later endorsed to the purchasers during the movement of goods between states.

Issue 2: Legal interpretation of inter-State sales
The Central Sales Tax Act defines inter-State sales as transactions that either occasion the movement of goods from one state to another or are effected by the transfer of documents of title during their movement between states. The Supreme Court has clarified that clauses (a) and (b) of section 3 are exclusive. In the present case, the dealer admitted to transferring railway receipts after the movement of goods from one state to another, indicating an inter-State transaction under clause (b) of section 3.

Issue 3: Precedent and case law
A Division Bench of the High Court previously ruled in a similar case that transactions involving the transfer of goods between states through railway receipts constitute inter-State sales. The facts of the current case closely mirrored the precedent, leading to the conclusion that the transactions in question were indeed inter-State sales, as determined by the assessing officer and the first appellate authority.

Issue 4: Distinguishing case law
The dealer's counsel cited other Division Bench decisions to support the argument that the transactions were intra-State sales. However, a detailed analysis revealed that the facts and legal principles in those cases were distinguishable from the present case. The court emphasized that the specific circumstances of each case must align with the criteria outlined in the Central Sales Tax Act to determine the nature of the sale accurately.

Conclusion:
After thorough analysis, the court determined that the transactions in question fell under clause (b) of section 3 of the Central Sales Tax Act, constituting inter-State sales. The decision was supported by the Division Bench's precedent and the legal interpretation of relevant provisions. As a result, the revision was allowed in favor of the Revenue, with costs imposed on the dealer-opposite party.