STATE OF MADRAS Vs. K NANDAGOPAL CHETTY

JUDGEMENT

(1.) THIS tax case raises the question of jurisdiction of the state of Madras to tax certain subsequent inter-State sales made by the respondent to a local buyer by transfer of documents in the course of inter-State movement of the goods. The disputed turnover amounts to Rs. 5, 296 subjected to tax at 7 per cent. under the proviso to section 9 (1) read with the proviso to section 6 (2) of the Central Sales Tax act, 1956. It is not in controversy that the goods initially moved out from the state of Gujarat to the respondent under an inter-State sale within the purview of section 3 (a)and that when they were in transit, he transferred the documents of title to a buyer in this State. It is again not in controversy that sales of the particular goods are exempt from tax in the State of Gujarat. Neither the respondent issued declarations in Form C to the Gujarat seller nor the latter certified to the former in Form E-I. Nevertheless, the revenue took the view that the subsequent sales effected by the respondent being outside the purview of section 6 (2), it has jurisdiction to tax such sales under the proviso to section 9 (1 ). The Tribunal did not accept that view and that is how the tax case is brought by the State before us.

(2.) IN our opinion, the Tribunal's conclusion is correct, but for different reasons. The matter relates to the assessment year 1960-61. We shall briefly notice the provisions of the Central Sales Tax Act, 1956, as amended and applicable to that assessment year. "appropriate State" is defined by section 2 (a) to mean, in relation to a dealer who has one or more places of business situate in the same State, that State, and in relation to a dealer who has places of business situate in different States, every such State with respect to the place or places situate within its territory. "place of business" under section 2 (dd)includes the place of business of the dealer's agent, or a warehouse, godown or other place where the dealer stores his goods, or a place where he keeps his books of account. Section 6 is the charging section. Sub-section (1), which is subject to the other provisions contained in the Act, visualises a multi-point tax on inter-State sales. But sub-section (2) exempts from tax subsequent sales by a dealer to a dealer, both registered, but subject to the condition contained in the proviso to the sub-section that the dealer effectin g the sale furnishes a certificate in the prescribed form, filled and signed by the registered dealer from whom the goods were purchased. The form prescribed under the rules is the E-1 Form. Section 7 requires the registration of dealers, based on the prescribed form of application, and the certificate of registration will show the specified goods in which the dealer, in whose favour the certificate is issued, will deal in the course of his business. The following section prescribes the rates of tax. Sub-section (1) provides for a concessional rate subject to certain conditions, and where the requisites for the concessional rates are not satisfied, sub-section (2) subjects the transactions to a rate specified therein or the rate for such goods prevailing in the appropriate State, whichever is higher. One of the requisites to qualify for the concessional rate is what is prescribed by sub-section (4) of section 8, and that is, a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. This declaration has to be furnished by the dealer selling the goods to the prescribed authority in the prescribed manner. The form prescribed for the declaration under the rules is form C. Section 9 is the procedural section as to levy and collection of tax. As the instant case will turn on the construction of this section, it may be reproduced for convenience : "9. (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce (whether such sales fall within clause (a) or clause (b) of section 3)shall be levied and collected by the Government of INdia in the manner provided in sub-section (3) in the State from which the movement of the goods commenced : Provided that, in the case of a sale of goods during their movement from one State to another being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub-section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods.