1965 (9) TMI 43 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 8(2) of the Mysore Sales Tax Act, 1957 and section 9(3) of the Central Sales Tax Act, 1956 regarding inter-State sales to unregistered dealers.

Analysis:
The judgment involves a revision petition under section 23 of the Mysore Sales Tax Act, 1957, read with section 9(3) of the Central Sales Tax Act, 1956. The main question raised was whether inter-State sales to unregistered dealers fall within section 8(2) of the Act. The petitioner, a registered dealer, sold goods to dealers in Patna and Calcutta during the assessment year 1958-59. The sales were not to registered dealers, and the issue was whether the turnover from these sales should be taxed under section 6 read with section 8(2) of the Act. The Sales Tax Authorities and the Sales Tax Appellate Tribunal held that the turnover was taxable under section 6 in accordance with the rates prescribed in section 8(2, leading to the revision petition.

The court analyzed the relevant provisions of the Act, particularly section 6, which is the charging section. It was observed that the liability to pay tax under the Act is subject to other provisions within the Act. The court referred to a Supreme Court judgment to interpret section 6, emphasizing that not all transactions in inter-State trade must bear tax. The court then delved into section 8(1), which deals with sales to the Government and registered dealers, and section 8(4), which outlines documentation requirements for transactions under section 8(1). The judgment highlighted the necessity of fulfilling these requirements for a transaction to fall within section 8(1).

The court then interpreted section 8(2), which prescribes rates for transactions not falling within section 8(1). It was clarified that section 8 is not a levy section but pertains to rates applicable if the transaction is taxable under section 6. The judgment concluded that all transactions not falling within section 8(1) are covered by section 8(2, categorizing transactions subject to tax under section 6 into these two sections. The court rejected the argument that non-compliance with section 8(4) would exclude transactions from section 8(2, emphasizing the plain language of the provision.

Moreover, the judgment addressed the contention that section 8(2) refers to "goods" and not "sales," asserting that turnover falling outside section 8(1) is encompassed by section 8(2). The court emphasized interpreting the statute based on its language without presuming legislative intent. The judgment also dismissed concerns about constitutional prohibitions on sales tax levies on inter-State sales to consumers, noting that the case involved sales to dealers, not consumers. Ultimately, the court held that the inter-State sales in question were liable to tax under section 6 read with section 8(2) of the Act, dismissing the petition.