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of <h1>Inter-State Sale Ruling: Rajasthan Firm vs. Kerala Project</h1> The court determined that the transaction between a Rajasthan firm and a Kerala project constituted an inter-State sale, rejecting claims of tax evasion. ... - Issues:Nature of transaction between petitioner and second respondent; Whether the transaction constitutes an inter-State sale; Validity of actions taken by first respondent under the Kerala General Sales Tax Act.Analysis:The case involved a registered firm in Rajasthan supplying marble tiles to a hospital construction project in Kerala. The petitioner's office in Ernakulam facilitated business by obtaining orders, but it was not registered under the Kerala General Sales Tax Act. The first respondent detained a consignment from Rajasthan, leading to a legal challenge. The first respondent alleged tax evasion and imposed penalties on the petitioner, claiming the sale of marble tiles was subject to tax under the Act.The main issue was the nature of the transaction between the petitioner and the second respondent. The court analyzed the conditions for an inter-State sale as laid down by the Supreme Court. It was found that all conditions were met, confirming the transaction as an inter-State sale. The court rejected the Revenue's argument that the goods were transferred to an agent in Ernakulam before reaching the second respondent, citing precedents where the presence of an intermediary did not change the character of the sale.Regarding the actions of the first respondent, the court found the communication preventing payments to the petitioner illegal. The notice issued under section 25(1) of the Act lacked specificity on the amount due, rendering it beyond the first respondent's jurisdiction. The court ruled that the sale of marble tiles was an inter-State sale under the Central Sales Tax Act, and the first respondent had no authority to levy tax under the Kerala General Sales Tax Act.Consequently, the court quashed all proceedings initiated by the first respondent and ordered the release of the bank guarantee. The original petition was allowed, with each party bearing their respective costs.
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