Local sale treatment for vanaspati supplies brought exemption under Delhi Sales Tax Rules and favoured the assessee.

Supplies of vanaspati to the Canteen Stores Department were treated as local sales rather than inter-State sales after the Delhi High Court applied the same contractual reasoning used in an earlier defence-supply reference. On examination of the contract, the Court concluded that the transactions were not effected in the course of inter-State trade or commerce and therefore fell within the exemption under rule 29(iii) and (iv) of the Delhi Sales Tax Rules, 1951. The question was answered in favour of the assessee, and the connected questions were treated as academic and left unanswered.

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Issues: Whether the supplies of vanaspati made to the Canteen Stores Department were inter-State sales or local sales so as to attract exemption under rule 29(iii) and (iv) of the Delhi Sales Tax Rules, 1951.

Analysis: The facts and contractual terms were identical to those considered in the earlier reference concerning similar supplies to the Ministry of Defence. On examination of the contract, the Court applied the previously settled reasoning and held that the sales were not effected in the course of inter-State trade and commerce. The sales were treated as local sales, bringing them within the scope of the exemption available under the relevant Delhi Sales Tax Rules.

Conclusion: The question was answered in the affirmative and in favour of the assessee. The connected questions were treated as academic and were not answered.

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