TMI Blog1963 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... endorsed in favour of the buyer. We may point out at this stage that this condition of the contracts was, according to the assessee, not an express condition but an implied condition and it was implied from the accepted practice of the assessee. It is difficult to see how any condition of the contracts could be implied from some practice followed by the assessee but we shall deal with that a little later when we examine the arguments advanced on behalf of the assessee. The buyers thereafter either took delivery of cloth at their godowns or gave instructions to the assessee to despatch cloth to such destinations as they required in which case the assessee despatched cloth to such destinations by rail according to the instructions of the buyers. The assessee made all arrangements for despatch of cloth to such destinations and also made the necessary applications to the Textile Commissioner for permission to despatch the same. The assessee took out the railway receipts in its own name as consignor as well as consignee and endorsed the railway receipts in favour of the buyers and delivered the same to the buyers in performance of the contracts. It was after the railway receipts duly e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case. The assessee contended that sub-clause (c) had no application because it applied only where goods were consigned outside India and that it could not possibly apply to sales in which goods were despatched by rail to destinations within India. The Tribunal on a construction of sub-clause (c) came to the conclusion that that sub-clause was not confined in its application to sales where goods were consigned outside India but also applied where goods were despatched by rail to destinations within India and that in the latter case it was necessary for the dealer claiming deduction to produce a certificate from the purchasing dealer in Form Aid. The Tribunal held that since the assessee had not produced certificates in Form Aid from the purchasing dealers in respect of the sales sought to be deducted from the turnover, the assessee was not entitled to deduction in respect of such sales. The second ground on which the claim for deduction was based was that the sales were in the course of inter-State trade or commerce and were, therefore, exempt from tax under Article 286(2) of the Constitution. This ground was also rejected by the Tribunal. The Tribunal took the view on a consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is or at an airport beyond the customs frontier. Though there is no specific reference to sub-clause (a) in the order of the Tribunal, it does appear from the facts stated in paragraph 2 of the statement of the case that the assessee must have relied on sub-clause (a), but the Tribunal, it seems, countered this argument of the assessee by pointing out that it was sub-clause (c) which applied and since the assessee had not satisfied the requirements of that subclause by producing certificates in Form Aid from the purchasing dealers, the assessee was not entitled to claim deduction in respect of the sales. The assessee contended that sub-clause (c) applied only to sales in which the goods were consigned outside India and had no application where goods were despatched by rail to destinations within India as in the present case, but this contention was negatived by the Tribunal and the Tribunal, relying on sub-clause (c), rejected the claim of the assessee. The real question, namely, whether the assessee was entitled to claim deduction under sub-clause (a) was thus side-tracked and the discussion before the Tribunal centred round the question whether sub-clause (c) applied. Now as we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se goods from one State to another under the contract of sale. Unless both these conditions are satisfied, there can be no sale in the course of inter-State trade." The judgment of Venkatarama Ayyar, J., in this case was of course a minority judgment so far as the main question of construction of clauses (1) and (2) of Article 286 was concerned, but on the question as to what is the true meaning of an inter-State sale, this statement was not contrary to anything stated in the majority judgments and was as a matter of fact accepted as a correct exposition of the true meaning of inter-State sale in the subsequent decision of the Supreme Court in Endupuri Narasimham Son v. State of Orissa[1961] 12 S.T.C. 282. In this subsequent decision the same learned Judge speaking on behalf of the Court said that in order that a sale might be inter-State, it is essential that there must be transport of goods from one State to another under the contract of sale and cited in support the aforesaid passage from his judgment in Bengal Immunity Company's case[1955] 2 S.C.R. 603; 6 S.T.C. 446. This theme was again elaborated by the Supreme Court in State of Assam v. Ramesh Chandra Dey[1961] 12 S.T.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee any term could be implied in the contracts of sale entered into by the assessee with different buyers. We can understand an argument which seeks to incorporate a term in a contract by reason of custom of the trade or by reason of custom of the area in which the business is carried on but it is difficult to conceive of a position in which a term can be implied in a contract by reason of a practice which is being followed by the seller. We are, therefore, not at all satisfied that there was any implied term in the contracts of sale as suggested by the assessee. But even if the submission of the assessee in this regard were to be accepted and a term were to be implied in the contract of sale, as submitted by the assessee, that would not help the assessee. According to the assessee the implied term of the contracts of sale was that the assessee should give delivery of the goods to the buyers at their godowns or should, if so instructed by the buyers, despatch the goods by rail to destinations intimated by the buyers and give constructive delivery of the goods by handing over the relative railway receipts duly endorsed in favour of the buyers. But this implied term clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enged before the Supreme Court, but the Supreme Court negatived the challenge by its decision in Sundararamier Co. v. State of Andhra Pradesh (1). It is, therefore, clear that no exemption can be claimed by the assessee even if the sales in question were inter-State sales. Mr. M.M. Thakore relied on section 46 of the Bombay Sales Tax Act, 1953, and contended that the Sales Tax Laws Validation Act, 1956, could not help the department to tax inter-State sales since it merely validated the law of a State which imposed or authorised the imposition of tax on interState sales, but by reason of section 46, the Bombay Sales Tax Act, 1953, did not impose or authorise the imposition of tax on interState sales. A similar contention based on section of 22 of the Madras General Sales Tax Act, 1939, which was in substantially the same terms as section 46 was advanced before the Supreme Court in Sundararamier's case(1) but it was negatived by the Supreme Court. The Supreme Court at pages 319 and 320 of the report in M.P.V. Sundararamier Co. and Others v. The State of Andhra Pradesh and Another[1958] 9 S. T. C. 298. , observed that the charging sections of the Madras General Sales Tax Act, 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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