Contractual documents must be examined before taxing supply of goods; assessment set aside and matter remanded for fresh decision.

Taxability under Section 3-F of the U.P. Trade Tax Act could not be sustained without examining the contract, purchase orders and invoices to determine whether the goods were supplied under an existing contract and had become ascertained goods before entry into the State. The Court held that the authorities had recorded findings on taxability without properly considering the contractual documents and contemporaneous material, including the purchase orders and invoices. Because the decisive question was whether the movement and supply of goods were referable to the existing contract, the matter required fresh examination on the contractual matrix and governing principles. The assessment order, first appellate order and Tribunal order were set aside and the matter was remanded.

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Issues: Whether the taxability of the transaction under Section 3-F of the U.P. Trade Tax Act, 1948 could be sustained without examining the contract, purchase orders and invoices to determine whether the goods were supplied pursuant to an existing contract and had acquired the character of ascertained goods before entry into the State.

Analysis: The Tribunal had upheld the assessment on the basis that the goods were supplied and handed over within the State and were therefore liable to be treated as an inter-State sale rather than an intra-State sale. The Court found that the authorities had recorded findings on taxability without due consideration of the contractual documents and the contemporaneous material on record, including the purchase orders and invoices. Since the decisive question was whether the movement and supply of goods were referable to the existing contract, the matter required fresh examination in the light of the contractual matrix and the governing principles.

Conclusion: The issue was answered in favour of the assessee. The assessment order, the first appellate order and the Tribunal's order were set aside and the matter was remanded to the assessing authority for a fresh decision.

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