Supreme Court directs sales assessment by tax authorities, rejects intra-state classification by High Court.

The Supreme Court criticized the High Court for determining sales as intra-state without assessing facts and directed the appellants to file returns for adjudication by the Assessing Authority. It emphasized that the High Court should not entertain writ petitions regarding the nature of sales for tax purposes and that such determinations should be made by the appropriate tax authorities. The Court directed the appellants to file returns for assessment within a month, to be adjudicated within two months, with authorities restrained from issuing further tax demands until completion, and clarified that deposited amounts should not be refunded. The appeals were disposed of with no costs awarded.

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Issues:
1. Determination of whether sales are inter-state or intra-state for tax purposes.
2. Jurisdiction of High Court to entertain writ petitions under Article 226.
3. Appropriate adjudication process for tax matters.

Issue 1: Determination of Sales for Tax Purposes
The appellants, registered dealers under various tax acts, participated in a tender process by the Federation for sale of Tendu leaves and bamboos. A condition required the highest bidder to remit taxes under the VAT Act to the State Government. The appellants sought a writ in the High Court to treat the sales as inter-state and not liable for VAT. The High Court, without relevant facts, held the sales as intra-state based on tender clauses. The Supreme Court emphasized that the determination of inter-state sales is a factual matter under the Act, involving Sections 3, 5, 6, and 9( i ). The Court criticized the High Court for deciding without assessing facts and directed the appellants to file returns for adjudication by the Assessing Authority.

Issue 2: Jurisdiction of High Court
The Supreme Court highlighted that the High Court should not entertain writ petitions under Article 226 in cases involving the nature of sales for tax purposes. It stressed that the assessing authority must determine if a transaction is intra-state or inter-state based on facts presented. The Court referenced precedents to emphasize that such determinations should be made by the appropriate tax authorities and not the High Court based on clauses in agreements.

Issue 3: Adjudication Process for Tax Matters
The Supreme Court set aside the High Court's orders and directed the appellants to file returns for assessment within a month. The Assessing Authority was instructed to adjudicate on the returns within two months, without influence from the High Court's observations. The Court restrained the authorities from issuing further tax demands until the process is completed. It also clarified that any amounts deposited during legal proceedings should not be refunded. The appeals were disposed of with no costs awarded.

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