1960 (2) TMI 45 - DSC - VAT and Sales Tax

Summary

Issues:
1. Assessment of sales tax on consignments delivered in Bihar by a company based in Uttar Pradesh.
2. Interpretation of the definition of "explanation sales" under the Bihar Sales Tax Act, 1947.
3. Determination of whether the actual delivery in Bihar is a direct result of the first sale with the buyers.
4. Analysis of the privity of contract between the petitioner-company and the subsequent buyers.
5. Evaluation of the standard contract form and its implications on the sales transactions.

Analysis:
The petitioner, a sugar manufacturing company based in Uttar Pradesh, was assessed for sales tax on consignments delivered in Bihar. The company claimed that these deliveries were not "explanation sales" under the Bihar Sales Tax Act, as they were a result of subsequent sales made by the buyers, not the initial sales. The petitioner argued that the actual delivery in Bihar was not a direct result of the first sale with the buyers. However, it was admitted that all deliveries took place in Bihar, and the consignor in the railway receipts was noted as the petitioner.

The contention revolved around whether the subsequent sales broke the continuity of the first transaction between the petitioner and the buyers. The Board analyzed the standard contract form between the petitioner and the buyers, highlighting that the movement of goods and their delivery were directly linked to the original contract. Despite intermediary transactions by the buyers to fix destinations, the original contract governed the movement of goods. The Board concluded that the consignments fell within the scope of "explanation sales" as defined by the Act, and upheld the assessment of sales tax on the transactions.

The judgment emphasized the lack of privity of contract between the petitioner and the subsequent buyers, indicating that the original contract with the buyers initiated the movement of goods. The Board dismissed the petition, stating that the petitioner had been correctly assessed for sales tax on the transactions. No other points were raised, and the petition was accordingly dismissed.