COMMISSIONER OF SALES TAX U.P. LUCKNOW, ETC. ETC. versus S/S SURESH CHAND JAIN, TENDU LEAVES DEALER, LALITPUR, ETC. ETC.

Citation: [1988] 3 S.C.R. 446 · Decided: 07-04-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

Judgment (excerpt)

COMMISSIONER OF SALES TAX U.P. LUCKNOW, ETC. 
~~
A 
ETC. 
v. 
SIS SURESH CHAND JAIN, TENDU LEAVES DEALER, 
LALITPUR, ETC. ETC. 
B 
APRIL 7, 1988 
...__ ~ 
ISABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.) 
U.P. Sales Tax Act, 1948: Section 21-Assessee--Carrying on 
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business in Tendu leaves-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, 
D 
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 
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E 
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 Asses-
sing Authority assessed the respondent. 
... 
The Assistant Commissioner (Judicial) having dismissed the )..• 
F 
appeal against the order of the Assessing Authority, the respondent 
went in Second Appeal to the Sales Tax Appellate Tribunal. The Tri-
bunal took notice of T .P. Form IV which was a transport permit issued 
" 
hy the Forest department, regarding the validity of Nikasi of Tendu 
leaves from the forest, and came to the conclusion that merely·because 
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T .P. Form had been issued, it does not follow that there were inter state 
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sales. The Tribunal allowed the appeal and quashed the order passed by 
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the assessing authority as well as First Appellate Authority. 
The Revenue went up in appeal to the High Court, which held that r 
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 
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condition precedent for imposing sales-tax under the Central Sales Tax 
446 
COMMR. OF SALES TAX v. S.C. JAIN [MUKHARJl, J.J 
447 
Act was not present and dismi~sed the appeal. 
A 
Dismissing the Special Leave Petitions of the Department, this 
< 
Court, 
al\ 
~'t-
' 
--'; 
HELD: I. Sale could be said to be in the course of inter-state 
trade. only if two conditions concur, viz. (I) a sale of goods, and (?) 
transport of those goods from one State to another. Unless both these 
conditions are satisfied, there could be no sale in the course of inter-
state 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 
B 
(, 
purchaser. [449F-G] 
D 
3. T .P. t'orm 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 vali-
dity 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 
E 
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 I 
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 
F 
G 
SABYASACHI MUKHARJI, J. This is an application for leave to 
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• 
448 
SUPREME COURT REPORTS 
I 1988] 3 S.C.R. 
A 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 
B Tendu leaves in question. On the contrary, its case was that the entire 
sales of Tendu leaves were effected in Uttar Pradesh. This contention 
wa

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