1966 (3) TMI 66 - SC - VAT and Sales Tax

Supreme Court Grants Rebate to Sugar Manufacturer for Out-of-State Sales

Lord Krishna Sugar Mills Ltd. Versus Commissioner of Sales Tax, UP., Lucknow

The Supreme Court allowed the appeal in Sales Tax Reference No. 263 of 1954, holding that the appellant, a sugar manufacturer and dealer in Uttar Pradesh, ... Entitlement to rebate under section 5 of the U.P. Sales Tax Act, 1948 - Held that:- Appeal allowed. Considering the pattern of the transactions disclosed it leaves no room for doubt that the contracts either provided for delivery of the goods to customers outside Uttar Pradesh or at any rate for such delivery pursuant to directions given by the purchasers & the appellant is entitled to rebate in respect of the said transactions under section 5 of the U.P. Sales Tax Act, 1948. Issues:Interpretation of section 5 of the U.P. Sales Tax Act, 1948 regarding rebate on sales for delivery outside Uttar Pradesh.Analysis:The Supreme Court heard an appeal against a High Court order in Sales Tax Reference No. 263 of 1954, where the High Court held that certain sales were not entitled to rebate under section 5 of the U.P. Sales Tax Act, 1948. The appellant, a sugar manufacturer and dealer in Uttar Pradesh, had entered into contracts with purchasers for the sale of sugar to fulfill contracts with customers outside the state. The railway receipts were prepared in the name of the appellant as both consignor and consignee, and the goods were delivered to customers outside Uttar Pradesh. The question before the Court was whether section 5 of the Act applied to these transactions, which allowed a rebate on sales for delivery outside Uttar Pradesh. The Court referred to a previous judgment in M/s. Amritsar Sugar Mills Co., Ltd. v. The Commissioner of Sales Tax, Uttar Pradesh, which interpreted section 5 to encourage export of goods from Uttar Pradesh. The judgment emphasized that as long as there was an intention to export and actual delivery was made to fulfill that intention, the sales would qualify for the rebate.The Court noted that in the present case, although the contracts were not produced, the pattern of transactions indicated that the goods were intended for delivery outside Uttar Pradesh. The Court held that the contracts either explicitly provided for delivery to customers outside the state or at least for delivery based on directions from the purchasers. Relying on the previous judgment's interpretation of section 5, the Court concluded that the appellant was entitled to the rebate under the Act for the transactions in question. Therefore, the appeal was allowed, and the appellant was granted the rebate with costs.In conclusion, the Supreme Court's judgment clarified the interpretation of section 5 of the U.P. Sales Tax Act, 1948 regarding the entitlement to a rebate on sales for delivery outside Uttar Pradesh. The Court emphasized the importance of actual delivery to fulfill the intention to export goods and held that even without produced contracts, the pattern of transactions could establish the eligibility for the rebate. The judgment reaffirmed the principles laid down in a previous case and granted the appellant the rebate under section 5 of the Act based on the facts of the case.