COMMISSIONER OF SALES TAX, U.P. AND ORS. ETC. ETC. versus BAKHTAWAR LAL KAILASH CHAND ARETI AND ORS. ETC. ETC

Citation: [1992] 3 S.C.R. 734 · Decided: 05-08-1992 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Dismissed

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Judgment (excerpt)

A 
COMMISSIONER OF SALES TAX, U.P. AND ORS. ETC. ETC. 
,k 
v. 
BAKHTAW AR LAL KAILASH CHAND ARETI AND ORS. ETC. 
ETC. 
B 
AUGUST 5, 1992 
[S. RANGANATHAN, V. RAMASWAMI AND B.P. JEEVAN 
REDDY, JJ.} 
).----
'-
U.P. Sales Tax Act, 1948/U.P. Sales Tax Rules, 1948: 
c 
Sections 2(e) and 3-~rchase Tax-Levy of-Commission agent/ 
Dealer purchasing goods on behalf of ex-State principals and despatching 
--
them to places outs.ide State-4-Vhether an inter-State purchase-4-Vhether 
liable to pay Purchase Tax under the State Act. 
~-
D 
Section 3-B, Fonn III-C-1: 
PUrchase Tax-Recovery of-Dealer wrongly issuing Declaration form 
. for inter-State transaction as intra-State purchase-Whether can be proceeded . 
against for tax leviable under Central Sales Tax Act-Provision applicable 
E 
only to tax leviable under State Act evaded. 
Central Sales Tax Act, 1956: 
y 
Section 3(c)-Purchase of goods by dealer on behalf of ex-State prin-
cipals and despatch to places outside State-4-Vhether an inter-State purchase. 
-
F 
The common question for consideration in the batch of appeals filed 
by the appellant-State was whether the goods purchased by a commission 
::: 
agent for and on behalf of the principals outside the State of U.P. and 
--,,1.. 
despatched to principals, were inter-State purchases under clause (a) of 
Section 3 of the Central Sales Tax Act, 1956 and were, therefore, not 
G exigible to tax under Section 3-D of the U.P. Sales Tax Act, 1948. 
The responl\ent-assessee, in one of the appeals, a registered dealer 
in Uttar Pradesh, dealing in foodgrains and oils among others, purchased 
y-- -
the commodities from Cartmen and agriculturists, both on his own ac-
count as well as for and on behalf of his ex-U.P. principals, i.e., dealers 
H located outside the State, and claimed that inasmuch as the goods pur-
734 
COMMR. SALES TAX v. BAKHTAWAR 
735 
~ 
chased for and on behalf of the ex-State principals were sent to them A 
-forthwith, the said purchases squarely fell under clause (a) of secti9n 3 of 
the Central Sales Tax Act and were not exigible to tax under the State Act • 
. However, the case of the State was that the purchases in question were to 
be treated as intra-State purchases, exigible to purchase tax under Section 
3-D of the U.P. Sales Tax Act, 1948 and, therefore, tax thereon was payable B 
by the selling dealer. 
·~ 
The High Court held that the purchases made by the commission 
agents in the appellant-State on behalf of the principals outside the State, 
where the goods so purchased were despatched to such principals, were 
f 
inter-State purchases not exigible to tax under the U.P. Sales Tax Act, 
-
1948. It found that the purchase orders placed by the ex-State principals 
to the assessee were not on the record but, from the conduct of the parties 
and on the facts, it was clear that the ex-State principals contracted with 
).__ 
the assessee that_ he should purchase goods on their behalf in the State 
and despatch them to ex-State destinations on the payment of commission D 
and the goods were sent to the ex-State principals in fulfilment of the 
contract. 
In the appeals before this Court, on behalf of the State it was 
contended that the purchases made by the respondent-dealer in the State 
E 
were completed purchases; once a purchase was complete in the State it 
'-y 
was immaterial whether the goods were later despatched to another State 
or sold within the State; for the purpose of the U.P. Sales Tax Act, it was 
enough that a sale or purchase took place within the State; the subsequent 
---· 
movement of the goods was irrelevant; a concluded sale must necessarily 
take place in the other State and not in the State from which the 'goods Fi 
emanated and a concluded or a completed sale must follow the movement 
I 
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of goods and should not precede and if a purchase or sale was complete 
in the State from which the goods emanated, it could never be an inter-
State purchase or sale. 
In one of the connected appeals the question was whether the G 
respondent-dealer who had issued Forms 111-C-I and paid tax on the 
... 
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purchases made by ~im under the U.P. Sales Tax Act, but subsequently, 
relying on the High Court's decision under appeal, claimed and got, 
: refund of the tax paid by him, on the ground that the purchases etfected 
by him were not assessable to tax under the U.P. Sales Tax Act, could be H 
,~ 
736 
SUPREME COURT REPORTS 
[1992) 3 S.C.R. 
A proceeded against under Section 3-B of the U

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