Court directs exclusion of ex works prices in tax cases, upholds remand order.

The court upheld the Tribunal's remand order but directed the appellate authority to exclude transactions where ex works prices were charged, treating them as local sales. The tax cases were allowed to the extent indicated, with no order as to costs.

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Issues Involved:
1. Whether the transactions in question were inter-State sales liable to be taxed under the Central Sales Tax Act.
2. Whether the Tribunal erred in construing the price list and the nature of the transactions.
3. Whether the production of C forms by the assessees affects the determination of the nature of the transactions.
4. Whether the delivery notes and statements from lorry drivers conclusively establish the inter-State nature of the sales.

Issue-Wise Detailed Analysis:

1. Whether the transactions in question were inter-State sales liable to be taxed under the Central Sales Tax Act:
The petitioners challenged the assessment of turnovers for the years 1965-66 and 1966-67, arguing that the transactions were not inter-State sales. They contended that the out-of-State buyers or their agents took delivery of the goods at the factory in Madras State, moving the goods at their own risk and cost. The assessing and appellate authorities treated the transactions as inter-State sales, but the Tribunal remanded the matter to determine the nature of the deliveries. The court concluded that if the assessees charged ex works prices and did not undertake the transport obligation, the transactions could not be considered inter-State sales under Section 3(a) of the Central Sales Tax Act.

2. Whether the Tribunal erred in construing the price list and the nature of the transactions:
The Tribunal construed the price list as indicating that prices included freight charges up to destination stations. The court agreed with the petitioners that the Tribunal erroneously interpreted the price list. The price list provided separate prices for ex works delivery and delivery in wagon loads, indicating that the transactions in question were charged at ex works prices, implying that the sales were completed at the factory. The court held that ex works pricing suggested that the goods were taken by the buyer or their nominee at the factory, not as part of an inter-State sale.

3. Whether the production of C forms by the assessees affects the determination of the nature of the transactions:
The authorities argued that the production of C forms by the assessees indicated the transactions were inter-State sales. The court, however, agreed with the petitioners that the production of C forms was done as a precaution after receiving a pre-assessment notice. The court held that the nature of the transactions should be determined based on statutory provisions, not on the conduct of the assessees. If the transactions were local sales, the production of C forms would not change their nature.

4. Whether the delivery notes and statements from lorry drivers conclusively establish the inter-State nature of the sales:
The authorities relied on delivery notes and a lorry driver's statement to argue the transactions were inter-State sales. The court found that the delivery notes in form XX were not conclusive evidence of inter-State sales. The statement of the lorry driver, not taken in the presence of the assessees or subject to cross-examination, was not considered conclusive. The court emphasized that the actual delivery within the State should be verified with reference to the prices charged. If the assessees charged ex works prices, it indicated that the sales were completed at the factory, not as inter-State sales.

Conclusion:
The court upheld the Tribunal's remand order but directed the appellate authority to exclude transactions where ex works prices were charged, treating them as local sales. The tax cases were allowed to the extent indicated, with no order as to costs.

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