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TMI Blog1967 (2) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... MITTER, J.- These are three appeals by leave granted by this Court from orders on reference under section 44(1) of the Madhya, Pradesh General Sales Tax Act, 1958, at the instance of the Commissioner of Sales Tax, Madhya Pradesh, to the High Court in that State. The question in each of the references was, whether, in the facts and circumstances of the case, the sales of sleepers (for railways) made by the non-applicant (Bengal Timber Trading Co. Ltd.) under the agreement with the President of India came under Article 286(1)(a) of the Constitution read with the Explanation thereto and therefore were exempt from the imposition of tax under the C.P. and Berar Sales Tax Act, 1947. Except for the amounts which varied from year to year involved in the sales, the facts and circumstances were common in all the three cases. The periods for which tax was sought to be imposed were: from 1st July, 1950 to 30th June, 1951, from 1st July, 1951 to 30th June, 1952, and from 1st July, 1952 to 30th June, 1953. It will be noted that all the three periods are prior to the amendment of Article 286 of the Constitution by the Constitution (Sixth Amendment) Act, 1956. The relevant portion of Article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her States exempt from sales tax by those other States." The last-mentioned case was considered by this Court in Singareni Collieries Co., Ltd. v. State of Andhra Pradesh and Others [1966] 17 S.T.C. 197 at 208; [1966] 2 S.C.R. 190 at 200., and it was held: "...... the expression 'actually delivered' in the context in which it occurs can only mean physical delivery of the goods, or such other action as puts the goods in the possession of the purchaser. The expression 'actually delivered' does not include mere symbolical or notional delivery, e.g., by entrusting the goods to a common carrier, or even by delivery of documents of title like railway receipts. It was said that the rule contained in section 39(1) of the Indian Sale of Goods Act, 1930, has no application in dealing with a constitutional provision which while imposing a restriction upon the legislative power of the States entrusts exclusive power to levy sales tax to the State in which the goods have been actually delivered for the purpose of consumption." The fiction of the sale or purchase being deemed to have taken place in the State in which the goods had been actually delivered as a direct result of sale or pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Control Officer, Eastern Group........ Clause (5)(a). " The sleepers shall be offered for examination and passing within the boundaries of the railway stations mentioned in the schedule unless permission is given in writing by the Sleeper Control Officer, Eastern Group, to the contractor to offer them for inspection at other stations or sites." Clause 5(g). "The contractor shall make all arrangements with the railway concerned for the lease of an adequate plot or plots of land at stations where he desires to offer sleepers for inspection and bear the charges thereof." Clause 9 provides for testing of the sleepers by the Sleeper Passing Officer and any sleepers which were rejected by him were to be removed from the railway premises at the charge and cost of the contractor. Under clause 10 the Sleeper Control Officer was to give the contractor a passing certificate of the number passed and rejected at such station. Under clause 11(a) "After passing, the contractor shall apply to and obtain from the Sleeper Control Officer, Eastern Group, his orders as to the despatch of the passed sleepers which would then be disposed of by the contractor either by handing them over to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rol Officer certifying that the sleepers have been received by him and have been checked and found in order. The payment of the remaining 10 per cent. shall be made on the bills submitted in triplicate as soon as the sleepers have been delivered as provided in clause 11(g). Clause 14 reads: "It must be expressly understood that all on account or advance payments are in no way to be considered as relieving the contractor in any way from the liabilities he may incur under the terms of the contract. This has express reference to clause 11(g) above." The schedule to the contract was in tabular form containing six columns. The 3rd column was headed "places at which to be delivered" and below it was mentioned "Dhamtari, Eastern Railway." The 5th column was headed "rate at which the sleepers to be supplied at each place inclusive of all demands, F.O.R." In this column were given the rates for different kinds of sleepers, i.e., of different dimensions. The 6th column was headed "month of completion" and in this column (to quote from the document at page 112 of the paper book) was given the date 15th October, 1952. The third note at the foot of the schedule provided that "the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the months of April to June were to be borne by the buyer. This was sought to be reinforced by clause 3(a) which provided that all loading and handling charges and expenses in connection with the putting of sleepers on rail and taxes and impositions were to be on the seller's account at Dhamtari. Counsel argued that clause 5(g) went to show that it was to suit the convenience of the purchaser that the contractor had to take on lease a plot of land belonging to the railway for storing the sleepers. Clauses 9 and 10, according to him, went to show that the rejected sleepers had to be taken out of the railway yard leading to the inference that only such goods as had been passed by the Sleeper Passing Officer were to be considered as the property of the railway. Great reliance was placed on clause 11(a) which according to counsel, clinched the matter. It was urged that if the goods were actually handed over to the consignee at Dhamtari railway station, there could be no manner of doubt that actual delivery took place there. According to counsel the position was the same if the goods were loaded into railway wagons and booked to the consignee under risk note 'B' in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Constitution. Our attention was drawn to a judgment of the Patna High Court in Birendranath Guha Co. v. State of Bihar [1954] 5 S.T.C. 273., where the assessee had taken lease of a timber forest in Nepal and had built godowns and offices in Nepal territory close to Jogbani railway station in the State of Bihar. The assessee supplied to the railways and despatched to different destinations various quantities of sleepers from Jogbani railway station after obtaining instructions from the Sleeper Control Office. The assessee contended that no sale took place in Bihar since the sleepers had been manufactured in Nepal and despatched from Jogbani railway station to places outside Bihar. The full terms of the contract in that case are not to be found in the report but it appears that it was worded very similarly to the contract before us. The Patna High Court held that on a consideration of all the provisions of the contract, it was manifest that the goods in question had been unconditionally appropriated to the contract at Jogbani railway station. Alternatively, the High Court held that there was appropriation of the goods within the meaning of section 23(2) of the Sale of Goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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