YASHWANT VARMA,J. - (1.) Heard Sri Krishna Agarwal learned counsel for the revisionist and the learned Standing counsel.
(2.) This revision arises out of an order of the Tribunal dated 10 November 2006 in terms of which it has held the revisionist liable to pay tax under the U.P. Trade Tax Act 1948 in respect of despatch of goods which had been consigned outside the State of U.P. While the case of the revisionist was that he was acting as the commission agent for certain ex U.P. principals, the Department has found that the revisionist had affected purchase and consigned the goods pursuant to the instructions received from certain dealers situate in Kanpur and therefore within the State. The explanation proffered by the revisionist before the Tribunal was that the entities at Kanpur were themselves agents of his ex U.P. principals and that there was no privity of contract between the revisionist and the dealers at Kanpur. The Tribunal however, has passed an order in which it holds that the first purchase of the goods in question must be recognised as having been affected by the dealers at Kanpur. It thereafter and inexplicably proceeded to hold that the purchases are liable to be taxed in the hands of the revisionist. Both these conclusions clearly cannot swim or survive together.
(3.) It is not disputed that the purchases were affected within the State but were consigned to outside entities who are described by the revisionist to be his ex U.P. principals. In view thereof the transaction clearly fell within the ambit of Section 3(a) of the Central Sales Tax Act 1956 and therefore there could have been no levy of tax on the revisionist under the 1948 Act. Even if it were presumed that there was some privity of contract between the revisionist and the dealer at Kanpur, the same also would not detract from the above conclusion for it is well settled that even though both the purchaser and seller may be situate within the State, if the transaction occasions the movement of goods outside the State, the State legislature clearly stands denuded of authority to levy tax. One may in this connection refer to the following observations as made by a Division Bench in Mewa Lal v. CST 1974 (34) STC 110 . "We are of the opinion that on the findings recorded by the Judge (Revisions), Sales Tax, the sales in dispute are no doubt inter-State sales but they are covered by Clause (a) and not. Clause (b) of Section 3. Clause (a) applies when a contract of sale occasions the movement of goods from one State to another. The finding that the despatch of goods to places outside U.P. was an integral part of the contract of sale shows that the contract of sale itself occasioned the movement of goods from this State to another State. The fact that the railway receipts were made out in the name of the assessee and were subsequently endorsed in favour of the purchasers also does not change the position. Clause (b) of Section 3 applies only where goods are put in transit without a prior contract of sale and they are sold by transfer of documents while they are still in transit. This is not the case here. The goods had moved under a contract of sale and the integral part thereof was to despatch them to stations outside U.P. The fact that the buyers and purchasers both belong to U.P. is also of no consequence. There can be an inter-State sale between two persons belonging to the same State if the goods move from one State to another as a result of a contract of sale or the goods are sold while they are in transit by transfer of documents. It is also immaterial as to where the property in goods passes from the seller to the purchaser. The question referred to us also relates to the rate of tax but the earned counsel for the assessee has stated that he does not dispute the rate of tax. We accordingly answer the question by saying that the sales in question were inter-State sales and were liable to tax under the Central Sales Tax Act.";