Intra-State sale and turnover inclusion: delivery within the State and tax collected from buyers both count in assessable turnover.

Sales of motor cars completed by delivery within Madras to sub-dealers were treated as intra-State sales, because the buyer's later transport of the goods outside the State did not convert the transaction into inter-State trade or commerce; the disputed turnover was therefore includible. Amounts collected by the dealer under section 8-B as tax were also treated as part of the sale price and validly brought into turnover under the validating legislation, which was within the Madras Legislature's competence under Entry 54 of List II read with Article 246(3). On that basis, both disputed items formed part of assessable turnover.

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Issues: (i) Whether sales of motor cars delivered within Madras to sub-dealers for onward transport outside the State were sales in the course of inter-State trade or commerce and therefore excluded from assessable turnover. (ii) Whether amounts collected by the dealer under section 8-B by way of tax were includible in assessable turnover, and whether the validating legislation was within legislative competence.

Issue (i): Whether sales of motor cars delivered within Madras to sub-dealers for onward transport outside the State were sales in the course of inter-State trade or commerce and therefore excluded from assessable turnover.

Analysis: The controlling principle was that a sale completed by delivery of the goods within the State to the buyer or his agent was an intra-State sale, even if the buyer intended to transport the goods outside the State for resale. The earlier decisions on the scope of Article 286(2) were treated as binding, and the Court declined to extend the test of commercial significance or continuous flow of trade to upset that settled position.

Conclusion: The item of Rs. 14,42,225-5-9 was rightly included in the assessable turnover, against the assessee.

Issue (ii): Whether amounts collected by the dealer under section 8-B by way of tax were includible in assessable turnover, and whether the validating legislation was within legislative competence.

Analysis: The Court treated the earlier ruling upholding the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954 as binding. It held that the amount collected from purchasers under section 8-B was, in substance, part of the price payable on the sale and could validly be deemed to form part of turnover. The legislative measure was held to fall within the competence of the Madras Legislature under Entry 54 of List II read with Article 246(3) of the Constitution.

Conclusion: The amounts collected under section 8-B were rightly included in the assessable turnover, against the assessee.

Final Conclusion: Both disputed items formed part of the assessable turnover, so the challenge failed and the assessment was sustained.

Ratio Decidendi: A sale completed by delivery within the State is not converted into an inter-State sale merely because the buyer thereafter transports the goods outside the State, and amounts collected by a dealer from purchasers as tax may, by valid legislation, be treated as part of turnover.

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