1986 (6) TMI 239 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of Section 2(o) of the Rajasthan Sales Tax Act, 1954.
2. Validity of Section 3(2)(a) of the Rajasthan Sales Tax (Amendment) Act, 1960.
3. Whether the transfer of goods between different units of the same company amounts to a sale.
4. Prematurity of the writ petition.

Issue-wise Detailed Analysis:

1. Validity of Section 2(o) of the Rajasthan Sales Tax Act, 1954:
The petitioner challenged the definition of "sale" under Section 2(o) of the Rajasthan Sales Tax Act, 1954, arguing it was ultra vires and invalid. The petitioner contended that the definition of "sale" in the Act of 1954 was broader than that in the Sale of Goods Act, which could render it unconstitutional. The court examined the definition of "sale" in both the Rajasthan Sales Tax Act and the Sale of Goods Act and concluded that the definition in the Act of 1954 did not transgress the limits of the definition of "sale" as commonly understood. The court referenced various Supreme Court judgments, including Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax Officer, to establish that a transaction must involve mutual assent to be considered a sale. The court ultimately held that Section 2(o) of the Act of 1954 was intra vires the Constitution and rejected the petitioner's contention.

2. Validity of Section 3(2)(a) of the Rajasthan Sales Tax (Amendment) Act, 1960:
The petitioner also challenged Section 3(2)(a) of the Rajasthan Sales Tax (Amendment) Act, 1960, as being violative of Articles 19(1)(g), 301, and 304 of the Constitution. The court did not provide a separate detailed analysis for this issue but implicitly upheld the validity of the provision by dismissing the writ petition.

3. Whether the transfer of goods between different units of the same company amounts to a sale:
The petitioner argued that the transfer of goods between its two units did not amount to a sale since both units were owned by the same company. The respondent contended that both units were registered separately under the Act of 1954 and the Central Sales Tax Act, and thus, the transfer of goods between them should be considered a sale. The court noted that the question of whether the transfer of goods between the Bhilwara and Gulabpura units amounted to a sale was essentially a question of fact. The court observed that the assessing authority had already recorded a finding on this issue, and it would not be appropriate for the court to record a finding that could prejudice the petitioner's right of appeal.

4. Prematurity of the writ petition:
The respondent raised a preliminary objection, arguing that the writ petition was premature since only a notice had been issued to the petitioner to show cause. The court agreed that the issue of whether the transfer of goods between the units amounted to a sale could only be decided after necessary evidence was produced before the assessing authority. The court emphasized that it would not be proper to record a finding on this issue at this stage, as it would prejudice the petitioner's right of appeal.

Conclusion:
The court dismissed all the writ petitions, holding that Section 2(o) of the Rajasthan Sales Tax Act, 1954, was intra vires the Constitution. The court also held that the question of whether the transfer of goods between the Bhilwara and Gulabpura units amounted to a sale was a question of fact to be decided by the assessing authority. The petitioner was advised to file a proper appeal against the order of assessment made by the assessing authority. There was no order as to costs.

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