TMI Blog1975 (12) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents in Civil Appeals Nos. 449-454 of 1971 and 888-889 of 1974, respectively. Hardayal Hardy, Senior Advocate, and Sukumar Ghose, Advocate, for the appellants in Civil Appeals Nos. 449-454 of 1971 and 888-890 of 1974, respectively. -------------------------------------------------- The judgment of the Court was delivered by FAZAL ALI, J.- These are two groups of appeals-one consisting of six appeals by the firm Balabhagas Hulaschand dealing in jute. Civil Appeal No. 449 of 1971 arises from the judgment of the High Court in S.J.C. No. 41 of 1968 decided on April 22, 1970 (Balabhagas Hulaschand v. State of Orissa Page 8 supra.), in respect of the assessment for the quarter ending June, 1960. The other five appeals are by the same firm in respect of the sales tax levied by the State of Orissa for the quarters ending December (sic), March, 1960, and December, 1960, to June, 1961, decided by the judgment of the High Court in S.J.C. Nos. 73-77 of 1968 dated April 27, 1970. As all the appeals involve a common point they were consolidated and have been heard together. Appeals Nos. 888-890 of 1974 have been filed by the firm M/s. Keluram Ramkaran in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted by the said firm and the price of the said goods was paid to the appellants. On the basis of these concluded transactions of sale the Government of Orissa levied sales tax under section 3(a) of the Central Sales Tax Act, 1956, on the basis that the sales were inter-State sales and, therefore, fell within the ambit of that section. The assessing authorities up to the stage of the Tribunal negatived the contention of the appellants that the sale was merely an internal sale which took place in the State of West Bengal and not an inter-State sale. Thereafter the appellants moved the Tribunal for making a reference to the High Court of Orissa but failed to persuade the Tribunal to make a reference. The appellants then moved the High Court of Orissa under section 24(3) of the Orissa Sales Tax Act to direct the Tribunal to make a statement of the case to the High Court. Accordingly the Tribunal referred the following points for consideration: "(1) Did title to the goods pass in Orissa or in West Bengal. (2) Even if title in the goods passed in West Bengal, whether, in the facts and circumstances of this case, the transaction constituted sale in the course of inter-State trade'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 3(a) of the Central Sales Tax Act. Before, however, taking up this point it may be necessary to mention the admitted circumstances in the case on which both the parties are agreed. They are: (1) that there was an agreement or contract of sale between the appellant-firms and the Calcutta firms by which the appellants agreed to sell raw jute of certain specifications of weight and quality to the Calcutta firms; (2) that at the time when the contract of sale was entered into, the raw jute was not in existence as it was being grown; (3) that after the goods were ready the same were booked in bags by the appellants not in their names but in the names of the buyer-firms in Calcutta; (4) that the goods were booked from Cuttack and Dhanmandal railway stations in Orissa to the railway sidings of the buyer-mills at Calcutta; and (5) that all the goods which are the subject-matter of the sales tax levy in all these appeals were ultimately accepted by the buyers at Calcutta and a concluded sale took place at Calcutta in West Bengal. In view of these admitted circumstances, we have to determine the legal position. To begin with, it would appear that the Central Sales Tax Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation by the Parliament so as to include within its fold not only sales of goods which are usually known in common parlance but also transactions, which legally cannot be called sales, for instance, a transfer of goods on the hire-purchase system. It seems to us that the Parliament wanted to give the widest amplitude to the word "sale" and, that is why, while in section 3 the words "sale of goods" have been used, in section 4(2), clauses (a) and (b), which deal with the situs of the sale, the words "contract of sale" have been used in the same sense. In other words, the word "sale" defined in clause (g) of section 2 and used in section 3 and other sections is wide enough to include not only a concluded contract of sale but also a contract or agreement of sale provided the agreement of sale stipulates that there was a transfer of property or movement of goods. In Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash [1954] 5 S.T.C. 193 at 196 (S.C.)., quoting Benjamin on Sale (8th Edition), Venkatarama Ayyar, J., who spoke for the court, observed as follows: "The distinction between a sale and an agreement to sell under section 1 of the English Act is thus stated by Benjamin on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded sale takes place. When the statute uses the words "sale or purchase of goods", it automatically attracts the definition of sale of goods as given in section 4 of the Sale of Goods Act, 1930, which is a statute passed by the same Parliament and is to some extent in pari materia to the Central Sales Tax Act so far as transaction of sale is concerned. Section 4 of the Sale of Goods Act runs thus: "4. (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional. (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred." Section 4(1), therefore, clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the goods from State X to State Y by booking the goods in the name of B. In such a case it is obvious that the sale is preceded by the movement of the goods and the movement of goods being in pursuance of a contract which eventually merges into a sale the movement must be deemed to be occasioned by the sale. The present case clearly falls within this category. Case No. II.- A, who is a dealer in State X, agrees to sell goods to B but he books the goods from State X to State Y in his own name and his agent in State Y receives the goods on behalf of A. Thereafter the goods are delivered to B in State Y and if B accepts them a sale takes place. It will be seen that in this case the movement of goods is neither in pursuance of the agreement to sell nor is the movement occasioned by the sale. The seller himself takes the goods to State Y and sells the goods there. This is, therefore, purely an internal sale which takes place in State Y and falls beyond the purview of section 3(a) of the Central Sales Tax Act not being an inter-State sale. Case No. III.-B, a purchaser in State Y, comes to State X and purchases the goods and pays the price thereof. After having purchased the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey both refer to the bargain resulting in the sale irrespective of whether it is in the stage of an agreement to sell, or whether it is a sale in which title to the goods has passed to the purchaser. That is also the definition of 'contract of sale' in section 5(1) of the Indian Sale of Goods Act." (2) That the following conditions must be satisfied before a sale can be said to take place in the course of inter-State trade or commerce: (i) that there is an agreement to sell which contains a stipulation express or implied regarding the movement of the goods from one State to another; (5) that in pursuance of the said contract the goods in fact moved from one State to another; and (iii) that ultimately a concluded sale takes place in the State where the goods are sent which must be different from the State from which the goods move. If these conditions are satisfied then by virtue of section 9 of the Central Sales Tax Act it is the State from which the goods move which will be competent to levy the tax tinder the provisions of the Central Sales Tax Act. This proposition is not, and cannot, be disputed by the learned counsel for the parties. Lastly, another aspect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable to this contract are as per the terms and conditions of the transferable specific delivery contract for raw jute of the East India Jute Hessian Exchange Ltd., Calcutta, and are subject to the bye-laws of that Exchange for trading in transferable specific delivery contracts for raw jute in force for the time being. Brokerage at one per cent. Yours faithfully, Shree Gopalji Sahay Meghraj, Sd/- Illegible. Licensed Broker, The East India Jute Hessian Exchange Ltd." It is conceded by counsel for the appellants that this letter or other letters in identical terms form the basis of the contracts of sale. The first part of the contract clearly mentions that the goods have been sold by the seller to the buyer. But of course that does not make the letter a concluded sale because the letter read as a whole would show that it is in respect of some future goods which have yet to be grown. We are, however, unable to agree with the learned counsel for the appellants that this contract is in respect of unascertained goods because the quality and the colour of the jute, the weight, the price, the markings, etc., are all mentioned in the contract. Therefore the goods are no dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Madras came to a finding that the sale was not at all complete, in view of the fact that the goods were unascertained. Furthermore, the decision was given on the peculiar facts in that case by which the branch at Calcutta had merely been authorised by the State Trading Corporation of India Ltd. to receive the goods despatched and it is doubtful whether there was a complete transaction of sale in that case. If, however, that case is taken to be an authority for the proposition that where the goods are unascertained and even if there is an inter-State movement of goods the sale is not an inter-State sale, we find ourselves difficult to agree with that view which is not in consonance with our interpretation of the provisions of the Central Sales Tax Act. The appellant then relied on another decision of the Madras High Court in Larsen and Toubro Ltd., Madras-2 v. Joint Commercial Tax Officer [1967] 20 S.T.C. 150 at 186-187. To begin with, this case appears to have been overruled by this court in State of Madras v. N.K. Nataraja Mudaliar [1968] 22 S.T.C. 376 (S.C.)., on another point. Even so, we are unable to see how this case is of any assistance to the appellant. Veeraswami, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents of title to them. Of course, in the first case, the movement of the goods must be from one State to another and in the second, the documents of title must be transferred during such movement." In State Trading Corporation of India Ltd. v. State of Mysore [1963] 14 S.T.C. 188 at 192 (S.C.); [1963] 3 S.C.R. 792 at 797-798., this court observed as follows: "Since the permits with which we are concerned provided that the supply had to be made from one or other factory situate outside Mysore, the contracts must be deemed to have contained a covenant that the goods would be supplied in Mysore from a place situate outside its borders. A sale under such a contract would clearly be an inter-State sale as defined in section 3(a) of the Central Sales Tax Act." Similarly, in Tata Engineering Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 S.T.C. 354 at 376 (S.C.); [1970] 3 S.C.R. 862 at 866., while describing the incidents of an inter-State sale, this court observed as follows: "A sale being transfer of property becomes taxable under section 3(a) 'if the movement of goods from one State to another is under a covenant or incident of the contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar. In other words, the movement of crude oil from the State of Assam to the State of Bihar was an incident of the contract of sale. No matter in which State the property in the goods passes, a sale which occasions 'movement of goods from one State to another is a sale in the course of inter-State trade'. The inter-State movement must be the result of a covenant express or implied in the contract of sale or an incident of the contract. It is not necessary that the sale must precede the inter-State movement in order that the sale may be deemed to have occasioned such movement. It is also not necessary for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It would be enough if the movement was in pursuance of and incidental to the contract of sale." We might mention here that the case cited above appears to be on all fours with the facts of the present case. In that case also the goods were supplied from Assam to Bihar through the pipe-lines in Assam to Barauni in Bihar. This court observed that no matter in which State the property in goods passes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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