TMI Blog1972 (9) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be inapplicable to sales of declared goods, need not be considered in this case because we are clearly of the view that the sales of cotton yarn sold to the branches of the respondent in Andhra Pradesh and Kerala, though they were inter-State sales of declared goods, were the first sales inside the State of Tamil Nadu and that being so, if those goods are transferred to Madras and sold in Madras, they are exempt from being taxed again since they have already been subjected to tax on the first sale inside the State. We are, therefore, in agreement with the conclusions of the Madras High Court. - C.A. Nos. 1845, 1846, 1847 of 1969, & 2684, 2685, 2686 of 1966 - - - Dated:- 1-9-1972 - HEGDE K.S., JAGANMOHAN REDDY P. AND KHANNA H.R. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to forbear from disallowing the exemption for the second and subsequent sales of yarn estimated at Rs. 5,08,247 for the assessment year 1965-66. The High Court of Madras allowed all the three petitions and quashed the proceedings as prayed for. The respondent is a registered dealer with its head office at Madras and branches in Madurai, Rajapalayam and Salem inside the State of Tamil Nadu and also in certain places in the States of Kerala and Andhra Pradesh including Hyderabad. During the years 1960-61 to 1964-65 and 1966-67 (up to October, 1966), it was dealing in various goods including cloth, yarn, etc., and was being assessed to tax under the Act on the turnover of the business. The gross turnover of the respondent included sales o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to branches in the States of Andhra Pradesh and Kerala have been charged to tax under the provisions of the Central Act. The only question in controversy is whether the sales made locally of yarn transferred to the Madras State from the stocks of yarn in the States of Andhra Pradesh and Kerala in respect of which sales tax had already been charged as inter-State sales are again liable to tax as first sales in the State of Madras. In order to resolve this controversy, it would be useful to notice the relevant provisions of the Act and the Central Act. Section 3(1) of the Act imposes a multi-point tax, while sub-section (2) provides that notwithstanding anything contained in sub-section (1) in the case of sale of goods mentioned in the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer in the State, the tax so levied and collected shall be refunded to the dealer concerned in such manner and subject to such conditions as may be prescribed. " The declared goods are specified in the Second Schedule to the Act of which cotton yarn, excluding cotton yarn waste, is liable to tax under the Act at the point of first sale in the State at the rate of 2 per cent. The Central Act defines "declared goods" as those declared under section 14 to be of special importance in inter-State trade or commerce. Section 3 lays down the principles for determining when a sale or purchase of goods is said to take place in the course of inter-State trade or commerce. Under section 14(ii)(b) cotton yarn, but not including cotton yarn waste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Act, that sale being physically a first sale inside the State out of which the inter-State sale has been carved out, it should follow that as the tax levied on the inter- State sale must prevail, there will be no tax liability on the same sale under the local Act on the ground that it is an inside sale". In this view it held that when the goods pursuant to the inter-State sale have been delivered outside the State but brought back into the State and then sold, that sale cannot in fact or in law be regarded as the first sale within the meaning of the Second Schedule to the local Act. It did not, however, think it necessary to consider on the facts of the case "what the position will be when a sale is an inside sale within the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be read subject to and in conformity with the provisions of section 15 and the policy underlining that section and whether section 6 will be inapplicable to sales of declared goods, need not be considered in this case because we are clearly of the view that the sales of cotton yarn sold to the branches of the respondent in Andhra Pradesh and Kerala, though they were inter-State sales of declared goods, were the first sales inside the State of Tamil Nadu and that being so, if those goods are transferred to Madras and sold in Madras, they are exempt from being taxed again since they have already been subjected to tax on the first sale inside the State. We are, therefore, in agreement with the conclusions of the Madras High Court. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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