1992 (8) TMI 241 - SUPREME COURT

Whether the purchases made by commission agents in U.P. on behalf of the principals outside the State, where the goods so purchased were despatched to such principals, were inter-State purchases not exigible to tax under the U.P. Sales Tax Act, 1948?

Held that:- Appeal dismissed. An out-State principal may first instruct his commission agent within the State of U.P. to purchase the goods on his behalf and to await his further instructions. Depending upon the market conditions and other circumstances, the ex-State principal may instruct his agent in the State either to sell the goods within the State or to despatch the goods beyond the State. If such were the case, Sri Sehgal would have been right in saying that the State of U.P. was competent to tax the purchase by the respondent-dealer. But that is not the case here on the facts found by the appropriate authorities.

The case of the authorities was that the respondent- dealer represented to the authorities by issuing form III-C-I that the purchases effected by him are intra-State purchases liable to be taxed under the State enactment and thereby prevented the authorities from taxing the transactions under the Central Sales Tax Act; he must, therefore, make good that tax amount. Assuming that what the authorities say is true, even so the respondent-dealer cannot be proceeded against under section 3-B for the reason that the said section applies to a situation where the tax "leviable under this Act", i.e., State Act, is evaded. It does not apply where the tax payable under the Central enactment is evaded. This appeal has to be dismissed on this short ground alone, and is accordingly dismissed.