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PETITIONER: COMMISSIONER OF SALES TAX U.P. LUCKNOW, ETC. ETC.

       Vs.

RESPONDENT: S/S SURESH CHAND JAIN, TENDU LEAVES DEALER, LALITPUR, ETC.ET

DATE OF JUDGMENT07/04/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 AIR 1197            1988 SCR  (3) 446  1988 SCC  Supl.  421     JT 1988 (2)    81  1988 SCALE  (1)693

ACT:      U.P. Sales  Tax Act,  1948: Section 21-Assesse-Carrying on business  in Tendu  leave-Case of assessee no inter State Sales-C  Existence   of  T.P.   Form  IV-Whether   evidences existence of inter state sales.      Central Sales  Tax Act, 1956: Section 3(a)-Inter states sales-Conditions to be satisfied-What are-Onus on Department to disprove dealers claim

HEADNOTE: %      The respondent-assessee  carried on  business in  Tendu leaves. He  contended before  the Assessing  Authority  that there was  no inter  state sale  of Tendu  leaves, that  the entire sales of Tendu leaves were effected in Uttar Pradesh, and that  he did  not know if the purchasers had taken these Tendu leaves  to places  outside Uttar  Pradesh, and even if they have so taken the assessee could not be assessed to tax under the Central Sales Tax Act, as the contract between him and the  purchaser  was  to  purchase  goods  in  U.P.  This contention was  not accepted  and  the  Assessing  Authority assessed the respondent.      The Assistant  Commissioner (Judicial) having dismissed the appeal against the order of the Assessing Authority, the respondent went  in Second Appeal to the Sales Tax Appellate Tribunal. The Tribunal took notice of T.P. Form IV which was a  transport   permit  issued   by  the  Forest  department, regarding the  validity of  Nikasi of  Tendu leaves from the forest, and  came to the conclusion that merely because T.P. Form had  been issued,  it does  not follow  that there were inter state  sales. The  Tribunal  allowed  the  appeal  and quashed the  order passed by the assessing authority as well as First Appellate Authority.      The Revenue  went up in appeal to the High Court, which held that  the goods  were moved out of U.P. in pursuance of an agreement  of sale  entered into between the assessee and their  customers   and  that  the  condition  precedent  for imposing sales-tax under the Central Sales Tax 447 Act was not present and dismissed the appeal.      Dismissing  the   Special  Leave   Petitions   of   the

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Department, this Court, ^      HELD: 1.  Sale could  be said  to be  in the  course of inter-state trade  only if two conditions concur, viz. (1) a sale of  goods, and  (2) transport  of those  goods from one State  to   another.  Unless   both  these   conditions  are satisfied,  there   could  be  no  sale  in  the  course  of interstate  trade.   There  must   be  evidence   that   the transportation was  occasioned by  the contract,  and  as  a result goods  moved out  of the  bargain between the parties from one State to another. [448H; 449A]      Bengal Immunity  Co. v.  State  of  Bihar,  6  STC  446 referred to      2. The condition precedent for imposing sales-tax under the Central  Sales Tax  Act, is that the goods must move out of the  State in  pursuance of  some contract  entered  into between the seller and the purchaser. [449F-G]      3. T.P.  Form IV  is a  transport permit  issued by the Forest  Department.  The  Forest  Department  has  given  in writing that  this permit  did not  relate to sale but was a certificate regarding the validity of Nikasi of Tendu Leaves from the  forest. Merely  because T.P. Form has been issued, it does  not  follow  that  there  were  inter-state  sales. [448F-G]      4. The  onus  lies  on  the  Revenue  to  disprove  the contention of  the assessee, that a sale is a local sale and to show that it is an inter-state sale. [449C]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Special  Leave  Petition (Civil) Nos. 15054-57 of 1985.      From the  Judgment and  Order dated  30.1.1985  of  the Allahabad High Court in Sales Tax Revision No. 334, 418, 285 and 332 of 1984.      S.C. Manchanda,  R.S. Rana  and Ashok K. Srivastava for the Petitioner.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI,  J. This  is  an  application  for leave to 448 appeal under  Article 136  of the  Constitution against  the Judgment and  order of  the High  Court of  Allahabad, dated 30th January,  1985. The  respondent carried on the business at the relevant time in Tendu leaves.      The respondent’s case was that there was no inter-state sales of Tendu leaves in question. On the contrary, its case was that  the entire  sales of Tendu leaves were effected in Uttar Pradesh.  This contention  was  not  accepted  by  the assessing authority.  Having failed in the first appeal, the assessee went  up in  second appeal and the Tribunal allowed the appeal  and quashed  the orders  passed by the assessing authority as  well as the Assistant Commissioner (Judicial). The Tribunal  exhaustively discussed  the facts.  They found that the  assessee carried  on business  in Tendu leaves and for the  year 1976-77  the assessee  had been assessed under Section 21 of the U.P. Sales Tax Act on inter-state sales of Rs.21,050 to  a tax  of Rs.2,105  whereas the  case  of  the assessee was  that the  inter-state sales  were nil.  It was contended on  behalf of  the assessee  that the assessee had effected the sales in U.P. According to the assessee, out of the above  sales of Rs.21,050, Tendu leaves worth Rs. 10,000 were sold  on 24th  April, 1976  to Sri  Gulam  Mohammad  of Kanpur and  those worth  Rs.11,050  were  sold  in  cash  at

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Lalitpur on 5th May, 1976.      It was further contended that the assessee did not know if the  purchasers had  taken these  Tendu leaves  to places outside U.P.  and even  if they  had so  taken, the assessee could not be assessed to tax under the Central Sales Tax Act as the  contract  between  him  and  the  purchaser  was  to purchase goods in U.P. The Tribunal took notice of T.P. Form IV  which  is  a  transport  permit  issued  by  the  Forest Department. The  Forest Department had given in writing that this transport  permit did  not relate  to sale but it was a certificate regarding the validity of Nikasi of Tendu leaves from the  forest. It  is well-settled  that even  if  it  is established that the assessee had obtained T.P. Form IV that by itself  will not  show that the assessee had entered into inter-state sales. Merely because T.P. Form had been issued, it does not follow that there were inter-state sales.      The principles  of inter-state sales were well-settled. In Bengal  Immunity Co.  v. State  of  Bihar,  (6  STC  446) Justice Venkatarama  Ayyar had  held that sale could be said to be  in the  course  of  inter-state  trade  only  if  two conditions concur,  namely, (1)  a sale  of goods  and (2) a transport of  those goods  from one State to another. Unless both these conditions were satisfied. there could be no sale in the course of 449 inter-state trade.  There  must  be  an  evidence  that  the transportation was  occasioned by  the  contract  and  as  a result goods  moved out  of the  bargain between the parties from one State to another.      It is  apparent from  the facts  found by  the Tribunal that  the   assessee  had  since  the  very  beginning  been contending that  he had  effected only  local sales.  He had also filed an affidavit stating that he had not effected any sales of Tendu leaves during the course of inter-state trade and commerce  and that  the had  never applied to the Forest Department for  issue of  Form T.P. IV and that no such Form was ever  issued to him and the Tendu leaves in dispute were not booked  by him  through railways  or trucks  for  places outside U.P.  The Tribunal  found nothing  to discredit this version of  the assessee.  The onus  lies on  the Revenue to disprove the  contention of the assessee. The Tribunal found no material  to do  so. On these facts the Tribunal rejected the contention of the assessee.      On these  contentions the  Revenue went  up  in  appeal before the  High Court.  The question  posed before the High Court was as follows:           "Whether on  the facts and under the circumstances           of the  case the  Tribunal Sales  Tax, Kanpur, was           legally justified  in knocking off the tax imposed           by the assessing authority?"      The High Court addressed itself to the question whether the sales effected by the respondent, were inter-state sales or not.  On an analysis of the findings of the Tribunal, the High Court  found that  the goods were not moved out of U.P. in pursuance  of an  agreement for sale entered into between the assessees  and their  customers. The  existence of  T.P. Form IV  was taken  note of  but that  did not  conclude the matter. The condition precedent for imposing sales-tax under the Central  Sales Tax  Act, is that the goods must move out of the  State in  pursuance of  some contract  entered  into between the  seller and  the purchaser. If that is a correct principle  in   law,  the   Tribunal  applied  this  correct principle of  law to  the facts  of this  case  taking  into cognizance the existence of T.P. Form.      In view of the facts of this case, the High Court found

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no  material   to   interfere   and   dismissed   assessee’s contention. We  are of  the opinion  that the High Court was right. In  the premises this application for leave must fail and is accordingly dismissed. N.V.K.                                   Petition dismissed. 450