Full Judgment Text
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PETITIONER:
COMMISSIONER OF SALES TAX U.P. LUCKNOW, ETC. ETC.
Vs.
RESPONDENT:
S/S SURESH CHAND JAIN, TENDU LEAVES DEALER, LALITPUR, ETC.ET
DATE OF JUDGMENT07/04/1988
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.
CITATION:
1988 AIR 1197 1988 SCR (3) 446
1988 SCC Supl. 421 JT 1988 (2) 81
1988 SCALE (1)693
ACT:
U.P. Sales Tax Act, 1948: Section 21-Assesse-Carrying
on business in Tendu leave-Case of assessee no inter State
Sales-C Existence of T.P. Form IV-Whether evidences
existence of inter state sales.
Central Sales Tax Act, 1956: Section 3(a)-Inter states
sales-Conditions to be satisfied-What are-Onus on Department
to disprove dealers claim
HEADNOTE:
%
The respondent-assessee carried on business in Tendu
leaves. He contended before the Assessing Authority that
there was no inter state sale of Tendu leaves, that the
entire sales of Tendu leaves were effected in Uttar Pradesh,
and that he did not know if the purchasers had taken these
Tendu leaves to places outside Uttar Pradesh, and even if
they have so taken the assessee could not be assessed to tax
under the Central Sales Tax Act, as the contract between him
and the purchaser was to purchase goods in U.P. This
contention was not accepted and the Assessing Authority
assessed the respondent.
The Assistant Commissioner (Judicial) having dismissed
the appeal against the order of the Assessing Authority, the
respondent went in Second Appeal to the Sales Tax Appellate
Tribunal. The Tribunal took notice of T.P. Form IV which was
a transport permit issued by the Forest department,
regarding the validity of Nikasi of Tendu leaves from the
forest, and came to the conclusion that merely because T.P.
Form had been issued, it does not follow that there were
inter state sales. The Tribunal allowed the appeal and
quashed the order passed by the assessing authority as well
as First Appellate Authority.
The Revenue went up in appeal to the High Court, which
held that the goods were moved out of U.P. in pursuance of
an agreement of sale entered into between the assessee and
their customers and that the condition precedent for
imposing sales-tax under the Central Sales Tax
447
Act was not present and dismissed the appeal.
Dismissing the Special Leave Petitions of the
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Department, this Court,
^
HELD: 1. Sale could be said to be in the course of
inter-state trade only if two conditions concur, viz. (1) a
sale of goods, and (2) transport of those goods from one
State to another. Unless both these conditions are
satisfied, there could be no sale in the course of
interstate trade. There must be evidence that the
transportation was occasioned by the contract, and as a
result goods moved out of the bargain between the parties
from one State to another. [448H; 449A]
Bengal Immunity Co. v. State of Bihar, 6 STC 446
referred to
2. The condition precedent for imposing sales-tax under
the Central Sales Tax Act, is that the goods must move out
of the State in pursuance of some contract entered into
between the seller and the purchaser. [449F-G]
3. T.P. Form IV is a transport permit issued by the
Forest Department. The Forest Department has given in
writing that this permit did not relate to sale but was a
certificate regarding the validity of Nikasi of Tendu Leaves
from the forest. Merely because T.P. Form has been issued,
it does not follow that there were inter-state sales.
[448F-G]
4. The onus lies on the Revenue to disprove the
contention of the assessee, that a sale is a local sale and
to show that it is an inter-state sale. [449C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Special Leave Petition
(Civil) Nos. 15054-57 of 1985.
From the Judgment and Order dated 30.1.1985 of the
Allahabad High Court in Sales Tax Revision No. 334, 418, 285
and 332 of 1984.
S.C. Manchanda, R.S. Rana and Ashok K. Srivastava for
the Petitioner.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. This is an application for
leave to
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appeal under Article 136 of the Constitution against the
Judgment and order of the High Court of Allahabad, dated
30th January, 1985. The respondent carried on the business
at the relevant time in Tendu leaves.
The respondent’s case was that there was no inter-state
sales of Tendu leaves in question. On the contrary, its case
was that the entire sales of Tendu leaves were effected in
Uttar Pradesh. This contention was not accepted by the
assessing authority. Having failed in the first appeal, the
assessee went up in second appeal and the Tribunal allowed
the appeal and quashed the orders passed by the assessing
authority as well as the Assistant Commissioner (Judicial).
The Tribunal exhaustively discussed the facts. They found
that the assessee carried on business in Tendu leaves and
for the year 1976-77 the assessee had been assessed under
Section 21 of the U.P. Sales Tax Act on inter-state sales of
Rs.21,050 to a tax of Rs.2,105 whereas the case of the
assessee was that the inter-state sales were nil. It was
contended on behalf of the assessee that the assessee had
effected the sales in U.P. According to the assessee, out of
the above sales of Rs.21,050, Tendu leaves worth Rs. 10,000
were sold on 24th April, 1976 to Sri Gulam Mohammad of
Kanpur and those worth Rs.11,050 were sold in cash at
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Lalitpur on 5th May, 1976.
It was further contended that the assessee did not know
if the purchasers had taken these Tendu leaves to places
outside U.P. and even if they had so taken, the assessee
could not be assessed to tax under the Central Sales Tax Act
as the contract between him and the purchaser was to
purchase goods in U.P. The Tribunal took notice of T.P. Form
IV which is a transport permit issued by the Forest
Department. The Forest Department had given in writing that
this transport permit did not relate to sale but it was a
certificate regarding the validity of Nikasi of Tendu leaves
from the forest. It is well-settled that even if it is
established that the assessee had obtained T.P. Form IV that
by itself will not show that the assessee had entered into
inter-state sales. Merely because T.P. Form had been issued,
it does not follow that there were inter-state sales.
The principles of inter-state sales were well-settled.
In Bengal Immunity Co. v. State of Bihar, (6 STC 446)
Justice Venkatarama Ayyar had held that sale could be said
to be in the course of inter-state trade only if two
conditions concur, namely, (1) a sale of goods and (2) a
transport of those goods from one State to another. Unless
both these conditions were satisfied. there could be no sale
in the course of
449
inter-state trade. There must be an evidence that the
transportation was occasioned by the contract and as a
result goods moved out of the bargain between the parties
from one State to another.
It is apparent from the facts found by the Tribunal
that the assessee had since the very beginning been
contending that he had effected only local sales. He had
also filed an affidavit stating that he had not effected any
sales of Tendu leaves during the course of inter-state trade
and commerce and that the had never applied to the Forest
Department for issue of Form T.P. IV and that no such Form
was ever issued to him and the Tendu leaves in dispute were
not booked by him through railways or trucks for places
outside U.P. The Tribunal found nothing to discredit this
version of the assessee. The onus lies on the Revenue to
disprove the contention of the assessee. The Tribunal found
no material to do so. On these facts the Tribunal rejected
the contention of the assessee.
On these contentions the Revenue went up in appeal
before the High Court. The question posed before the High
Court was as follows:
"Whether on the facts and under the circumstances
of the case the Tribunal Sales Tax, Kanpur, was
legally justified in knocking off the tax imposed
by the assessing authority?"
The High Court addressed itself to the question whether
the sales effected by the respondent, were inter-state sales
or not. On an analysis of the findings of the Tribunal, the
High Court found that the goods were not moved out of U.P.
in pursuance of an agreement for sale entered into between
the assessees and their customers. The existence of T.P.
Form IV was taken note of but that did not conclude the
matter. The condition precedent for imposing sales-tax under
the Central Sales Tax Act, is that the goods must move out
of the State in pursuance of some contract entered into
between the seller and the purchaser. If that is a correct
principle in law, the Tribunal applied this correct
principle of law to the facts of this case taking into
cognizance the existence of T.P. Form.
In view of the facts of this case, the High Court found
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no material to interfere and dismissed assessee’s
contention. We are of the opinion that the High Court was
right. In the premises this application for leave must fail
and is accordingly dismissed.
N.V.K. Petition dismissed.
450