ENDUPURI NARASIMHAM AND SON V. THE STATE OF ORISSA AND ORS INSC 93; AIR 1961 SC 1344; 1962 SCR 314

Name: Endupuri Narasimham and Son vs The State of Orissa and Others, 1961

Facts: The assertion of the petitioner was a joint Hindu family business partnership engaged as a dealer in the Orissa Sales Tax Act, 1947. The firm directly purchased castor seeds, turmeric, gingili and other commodities within the state of Orissa and sold the same to dealers in the other states.The Sales Tax Officer has included the above purchases in the turnover of the petitioner and levied tax of Rs. 27,161.13 for the period upto 31.3.1956 on sales made with effect from 1.4.1952.The contention of the petitioner is

Issues: Whether the materials bought by the petitioner and sold outside the state constituted inter-State Trade and were hence beyond the pale of the sales tax under Article 286(2).

Whether the impostation of sales tax under the Orissa Sales Tax Act is unconstitutional or otherwise.

Holdings: The Supreme Court found that the transactions of purchase and sale taxed were exclusively accomplishment of intra-state sale since the assessee had purchased goods which were sold by and sold to persons within Orissa.The subsequent sale by the petitioner to dealers in other states was distinct and separable transaction and could not override or alter the character of intra-state purchase made within Orissa; that the tax on such purchases was, therefore, not violative of clause (2) of

Rationale: For a sale or purchase to qualify as being in the course of inter-State trade, there must be a transportation of goods from one state to another under the contract of sale or purcase.In the present case the initial purchases were made within the state of Orissa and there was no transportation of goods across any state under the sale or purchase contract.In this regard the Court led this case to be distinguishable from the recent decided case of Mohanlal H The State of Madhya Pradesh, as in the case with many others, where purchase was a part of inter-State trade mainly because goods where sold and transported between states under the purchase contracts. The latter intra-State sales by the petitioner were different transactions which cannot be colluded with the original intra-State purchases to change their character.