TMI Blog2021 (7) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to determined whether the transactions were transactions in the course of inter state sale. Section 6 cannot be invoked to levy purchase tax in case of goods sold or purchased in course of an inter-state trade or commerce. Thus, before invoking Section 6 of the Act, the authorities under the Act were required to ascertain the nature of transaction. It is found from the order of the tribunal that no finding has been recorded with regard to the nature of transaction and with reference to the material available on record and a general observation has been made that branch transfers are nothing but dispatches by the petitioner to outside the branches as a consequence of purchase. Before upholding the levy of tax, the nature of transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business premises at Mysore Road, Bangalore and was carrying out sales of electronic goods, electrical goods, color television sets, monitors and picture tubes etc. M/s BPL Ltd. had an idle assembling / manufacturing unit at its factory at Old Madras Road, Bangalore and offered to undertake to assemble /manufacture CPU and monitors for the petitioner. The petitioner accepted the offer and entered into a purchase agreement with M/s BPL Ltd on 15.12.2003 for assembling, manufacturing and supply of color television sets and monitors. Clause (iv) of the agreement contains a stipulation that M/s BPL Ltd shall deliver duly assembled monitors to the various branches of the petitioner situate outside the State of Karnataka specified in the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Section 6 of the Act could not have been invoked to levy purchase tax. However, the aforesaid aspect of the matter has not been appreciated by the authorities under the Act. It is also submitted that inter state sales are not covered under the expression 'taxable turnover' as defined under Section 2(u-i) of the Act and therefore, the provisions of the Act were not applicable to the transactions in question. In support of aforesaid submissions, reliance has been placed on decision of Supreme Court in 'STATE OF ORISSA AND ANOTHER VS. M/S K.B.SAHA AND SONS INDUSTRIES PVT. LTD AND OTHERS', (2007) 7 VST 214 (SC) and decisions of Gujarat High Court in 'COMMISSIONER OF SALES TAX VS. M/S PURE BEVERAGES LTD', ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken place in the course of inter State trade or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. 7. Thus, it was stated that if the movement of goods from one state of another is a result of covenant or an incident of contract of sale, then the sale is inter-state sale. It was further held that in order decide whether the sale is inter state sale it is not sufficient that movement of goods should have been occasioned by the sale or should be incidental thereto and what is important is movement of goods and sale must be inseparably connected. The relevant extract of Section 6 of the Act reads as under: 6 Subject to the provisions of sub-section (5) of section 5, every dealer who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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