9911796707
TMI Blog1970 (4) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... know, Kanpur, Faizabad and Bombay. They are engaged in the business of manufacturing and selling bidis, and are registered as dealers under the C.P. and Berar Sales Tax Act, 1947. Between November, 1948, and October 12, 1949, the appellants despatched bidis of the value of Rs. 22,60,241-5-0 to their branch offices outside the State of Madhya Pradesh, and bidis of the value of Rs. 5,35,404-15-0 under instructions from their branches to other destinations outside the State. The Sales Tax Officer rejected the contention of the appellants that the turnover resulting from the sale of bidis supplied to the branches and under instructions from the branches was not liable to be taxed under the C.P. and Berar Sales Tax Act, 1947, and brought the agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority of a State to levy tax on transactions of sale was not subject to the limitation prescribed by article 286 of the Constitution. Section 2(g) of the C.P. and Berar Sales Tax Act, 1947, as then in operation provided: "'sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge......... Explanation (II).-Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in the Central Provinces and Berar at the time when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " In appeal the Deputy Commissioner of Sales Tax observed: "From the insistent demands of the branch managers, it is evident that the appellants' bidis were in great demand in those markets. The buyers were anxious to get stocks of appellants' brands of bidis and they were placing orders on the branches so that there would be an uninterrupted supply of bidis. It is also amply clear that in a very large number of cases, orders were already accepted by the branches for the supply of bidis. These circumstances lead to the inevitable conclusion that a large proportion of the despatches were covered by previous orders accepted by the branches or head office." The Commissioner of Sales Tax agreed with the finding of the Deputy Commissioner. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuable consideration. Under the provisions of the Sale of Goods Act, 1930, "sale" would ordinarily take place where goods are by mutual agreement appropriated towards the contract. Explanation (II) to section 2(g) however prescribes for the purposes of the C. P. and Berar Sales Tax Act a fictional situs of the sale. If at the date of the contract of sale, goods are actually within the Province, the sale wherever it takes place, is deemed by a legal fiction to take place within the Province. The condition of liability to tax is the existence of goods within the Province at the date of the contract of sale: it is immaterial that the contract of sale and the passing of property in the goods take place outside the taxing Province. To attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces and Berar Sales Tax Act, 1947, to have been sold within the Province, merely because the goods had subsequently come into existence. The case related to sales tax on sale of logs of wood. At the date of the agreement of sale, the logs were unascertained goods, for they were still to be cut in the shape of logs from standing trees. The court held that Explanation (II) to section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947, did not render the sale of the logs of wood liable to sales tax, for at the date of the contract of sale the logs of wood agreed to be sold were not in existence. The sales tax authorities did not attempt to determine whether at the date of the contracts pursuant to which the goods were despatched by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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