1982 (10) TMI 192 - HC - VAT and Sales Tax

Company's Interstate Purchase Not Liable for Tax

The State of Gujarat Versus Bombay Metal Alloys & Mfg. Co. Pvt. Ltd.

The court held that the purchase of goods by the applicant-company was in the course of inter-State trade under section 3(a) of the Central Sales Tax Act, ... - Issues Involved:1. Whether the purchase of goods by the applicant-company was in the course of inter-State trade under section 3(a) of the Central Sales Tax Act, 1956.2. Whether the applicant-company was liable to be registered as a dealer under section 29(1) of the Gujarat Sales Tax Act, 1969.3. Whether the applicant-company purchased the goods in connection with its business as defined in section 2(4)(i) of the Gujarat Sales Tax Act, 1969.4. Whether the applicant-company was a dealer under section 2(10) of the Gujarat Sales Tax Act, 1969.5. Whether the applicant-company was liable to pay purchase tax under section 15 of the Gujarat Sales Tax Act, 1969.6. Whether the applicant-company was entitled to a deduction of Rs. 30,000 or the entire purchase price of Rs. 2,25,600 under section 3(2) of the Gujarat Sales Tax Act, 1969.Issue-wise Detailed Analysis:1. Inter-State Trade:The primary issue was whether the purchase of goods by the applicant-company was in the course of inter-State trade under section 3(a) of the Central Sales Tax Act, 1956. The court held that for a sale to be considered inter-State, it must occasion the movement of goods from one state to another. The Tribunal found that the goods were not specific and ascertained at the time of the auction and were not in a deliverable state. The property in the goods passed to the applicant-company only after they were weighed, packed, and loaded for transport to Bombay. The movement of goods was incidental to the contract of sale, satisfying the criteria for an inter-State sale under section 3(a). Thus, the court concluded that the purchase was in the course of inter-State trade and not liable to purchase tax under the Gujarat Sales Tax Act, 1969.2. Registration as a Dealer:The Tribunal had held that the applicant-company was not liable to be registered as a dealer under section 29(1) of the Gujarat Sales Tax Act, 1969, if the purchase was considered an inter-State transaction. Since the court affirmed that the purchase was an inter-State sale, the question of registration under the Gujarat Sales Tax Act became academic and was not addressed further.3. Purchase in Connection with Business:The Tribunal had found that if the purchase was considered a local transaction, it was in connection with the applicant-company's business within the meaning of section 2(4)(i) of the Gujarat Sales Tax Act, 1969. However, since the court determined the purchase to be an inter-State transaction, this issue was rendered academic and was not discussed further.4. Definition of Dealer:The Tribunal had concluded that the applicant-company was a dealer under section 2(10) of the Gujarat Sales Tax Act, 1969, even though it did not have a place of business within Gujarat. This determination was based on the single isolated transaction. However, given the court's ruling that the transaction was inter-State, this issue was also rendered academic.5. Liability to Pay Purchase Tax:The Tribunal had held that if the purchase was considered a local transaction, the applicant-company was liable to pay purchase tax under section 15 of the Gujarat Sales Tax Act, 1969, after allowing a deduction of Rs. 30,000. Since the court ruled the purchase as inter-State, this issue did not require further consideration.6. Entitlement to Deduction:The Tribunal had determined that if the purchase was local, the applicant-company was entitled to a deduction of Rs. 30,000 under section 3(2) of the Gujarat Sales Tax Act, 1969. With the court's decision that the purchase was inter-State, this issue became moot.Conclusion:The court concluded that the purchase of goods by the applicant-company was in the course of inter-State trade and thus not liable to purchase tax under the Gujarat Sales Tax Act, 1969. Consequently, the remaining issues were rendered academic, and the court did not express opinions on them. Each party was directed to bear its own costs.