1963 (10) TMI 23 - HC - VAT and Sales Tax

Interpretation of Sales Tax Act: Inclusion of Exported Timber Purchase Price in Turnover

The Court interpreted section 4(6) of the C.P. and Berar Sales Tax Act, 1947, ruling that the purchase price of timber exported out of the state should be ... - Issues:1. Interpretation of section 4(6) of the C.P. and Berar Sales Tax Act, 1947 regarding inclusion of purchase price in turnover.2. Determining whether the sales to railways were for the purpose of consumption in the state.3. Taxability of goods sold in the course of inter-State trade under State law.Analysis:1. The Court was tasked with interpreting section 4(6) of the C.P. and Berar Sales Tax Act, 1947, to decide if the purchase price of timber exported out of the state should be included in the turnover. The provision mandates that if goods are purchased for resale in the state for consumption but used for another purpose, the price paid shall be included in turnover. The Court found that the applicant failed to utilize the timber for the intended purpose of consumption in the state, justifying the inclusion of the purchase price in the turnover.2. The applicant contended that since the timber was delivered to railway authorities in the state, the subsequent export should not attract inclusion in the turnover. However, the Court noted that the ultimate consignee was outside the state, indicating the sale was not for consumption in the state. The Court clarified that delivery to railways did not alter the purpose of the sale, which was for export, leading to the inclusion of the purchase price in turnover.3. Regarding the taxability of goods sold in the course of inter-State trade under State law, the Court distinguished a previous case where initial sales were not liable to tax. In the present case, the initial sales were liable to tax but were not taxed due to declarations made by the applicant. The Court emphasized that the applicant's failure to adhere to the declarations led to the tax liability under section 4(6) of the Act, ensuring the state could recover the tax subsequently. The Court ruled in favor of including the purchase price in turnover and directed the applicant to bear the costs of the reference.This judgment clarifies the application of tax laws concerning the inclusion of purchase price in turnover, the determination of sales for consumption in the state, and the taxability of goods sold in inter-State trade under State law.