1958 (3) TMI 49 - SC - VAT and Sales Tax

Whether the sales proposed to be taxed by the respondent took place in the course of inter-State trade and were therefore not liable to be taxed by reason of Article 286(2) of the Constitution? Whether on the facts the sales in question did not fall within the Explanation to section 33 of the Bihar Sales Tax Act? Held that - These are questions which have to be determined by the appropriate Sales Tax Authorities on materials to be placed before them, and cannot be raised in these proceedings. Appeal dismissed.

Summary

Issues:
1. Appellants challenging the proposed levy of tax by the Commercial Tax Officer of Bihar.
2. Applicability of Article 286(2) of the Constitution on inter-State trade.
3. Interpretation of section 33 of the Bihar Sales Tax Act, 1947.
4. Validity of Sales Tax Laws Validation Act No. VII of 1956.
5. Assessment of sales tax based on quarterly returns.
6. Jurisdiction of Sales Tax Authorities to determine the location of sales.

Analysis:
The appellants, a private limited company based in Bombay, contested the legality of a tax levy proposed by the Commercial Tax Officer of Bihar on sales made to consumers in Bihar. The appellants argued that the sales in question were part of inter-State trade and thus not subject to taxation under Article 286(2) of the Constitution. Additionally, they contended that section 33 of the Bihar Sales Tax Act did not impose a tax on the sales in question and that any retrospective levy would be unconstitutional without prior authorization from Parliament.

The appellants further challenged the validity of the Sales Tax Laws Validation Act No. VII of 1956, claiming it was ultra vires as it attempted to validate unconstitutional provisions. They argued that retrospective assessment under section 33 would cause hardship as they could not pass on the tax to consumers. However, the Court dismissed these arguments, holding them to be unsustainable based on previous judgments.

The appellants also disputed the applicability of the Explanation to section 33, claiming that the sales were conducted entirely within Bombay and thus not subject to taxation in Bihar. The Court ruled that such factual determinations should be made by the Sales Tax Authorities based on the evidence presented to them, rather than in the current proceedings.

In a separate judgment, Justice Sarkar concurred with the majority decision, resulting in the dismissal of the appeal. The Court upheld the proposed tax levy and affirmed the jurisdiction of the Sales Tax Authorities to determine the location of sales for tax purposes.