Inter-State sales tax jurisdiction turns on where goods' movement begins; procedural clauses cannot expand levy authority.
An unregistered dealer remained liable to tax on subsequent inter-State sales because the charging provision applied to every dealer, and the proviso referring to a registered dealer governed collection and jurisdiction rather than creating an exemption. The court also held that where the movement of goods commenced from Bihar, the State from which movement began had the substantive jurisdiction to levy and collect the tax; assessment machinery, definition clauses, or registration-based arguments could not enlarge Uttar Pradesh's jurisdiction. The assessment was quashed, recovery was restrained, and refund was directed if tax had already been realised.
Issues: (i) Whether a dealer who had not obtained registration could escape liability to tax on subsequent inter-State sales merely because the proviso to the jurisdictional provision referred to a registered dealer; (ii) Whether the sales tax authorities in Uttar Pradesh had jurisdiction to assess and levy tax where the movement of the goods commenced from Bihar.
Issue (i): Whether a dealer who had not obtained registration could escape liability to tax on subsequent inter-State sales merely because the proviso to the jurisdictional provision referred to a registered dealer.
Analysis: The charging provision made every dealer liable to tax on sales effected in the course of inter-State trade. The proviso dealing with a registered dealer was treated as governing the State competent to collect the tax, not as creating an exemption from tax liability for an unregistered dealer. The scheme of the Act, including the different treatment of registered and unregistered dealers, did not support reading the proviso as conferring immunity on an unregistered dealer.
Conclusion: The contention that an unregistered dealer was not liable to tax on such subsequent sales was rejected.
Issue (ii): Whether the sales tax authorities in Uttar Pradesh had jurisdiction to assess and levy tax where the movement of the goods commenced from Bihar.
Analysis: The jurisdictional provision fixed levy and collection in the State from which the movement of the goods commenced, and the assessment procedure was to follow the sales tax law of that State. The court held that the expression used in the assessment machinery could not override the substantive jurisdictional rule. It further held that the definition clause could not be applied in a manner inconsistent with the charging and jurisdiction-conferring provision. The argument based on registration, and the alternative contention that the goods must have been in Uttar Pradesh at the time of the second sale, was also rejected. The existence of an alternative remedy did not prevent interference where lack of jurisdiction was apparent on the face of the record.
Conclusion: The Uttar Pradesh Sales Tax Officer lacked jurisdiction to make the assessment.
Final Conclusion: The assessment order was quashed and the respondents were restrained from recovering the tax, with refund directed if any amount had already been realized.
Ratio Decidendi: For inter-State sales, the State where movement of the goods commenced has the jurisdiction to levy and collect the tax, and a definition clause or procedural provision cannot enlarge jurisdiction beyond that substantive rule.
TaxTMI 
AI Drafter ✕
TaxTMI 
