TMI Blog1959 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... F.O.R. supplier's station)? (b) That there being no rule or any other notification in force about the manner of the discharge of the burden of proof of sale to the registered dealer, whether it amounts to a failure on the part of the assessee to discharge the onus if he could only supply the necessary particulars with sales tax registration numbers of their registered dealers to whom they supplied the goods." The Member, Board of sales Tax, was of opinion that question (b) did not arise out of the order of the Commissioner. He consequently refused to refer the aforesaid question for opinion to this Court. He, however, recast question (a) and referred to this Court for opinion the said question in the form mentioned above. An application was made to this Court for issue of a mandamus directing the Board to refer question (b) which was allowed and in pursuance of the direction of this Court the question has been referred for opinion, and the Board has stated the case on the point raised. Regarding question (a) the opinion of the Member, Board of Sales Tax, is that it should be answered in the affirmative. Regarding question (b) also the opinion of the Member, Board of Sales Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he balance was disallowed. An appeal was filed to the Assistant Commissioner of Taxes challenging the order of the Superintendent of Taxes which was dismissed. Thereafter a revision was filed under section 31 of the Act before the Commissioner of Taxes which was also dismissed. An application for reference was then made to the Member, Board of Sales Tax, which was disposed of as indicated above. It is contended by the counsel for the assessee that the contract for sale and purchase was completed in Calcutta. The price was to be paid in Calcutta. The actual physical delivery of the goods for consumption was to be made outside the State of Assam. Under these circumstances, the sale was of inter-State character and the sale is, therefore, an outside sale for Assam and cannot be taxed under the Act. It is also contended that the State of Assam could not tax the disputed sales in view of the provisions of Article 286(1) of the Constitution. The Advocate-General who appears for the department contends that the transaction in question is an inside sale and not an outside sale. The provisions of section 3(1-A) of the Assam Sales Tax Act and the provisions of Article 286(1)(a) are not, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in clause (1958) A.I.R. 1958 Assam 119; 10 S.T.C. 327. (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." The contention of the Advocate-General is that according to the definition of "sale" in the Assam Act, the sale is complete where the property in the goods passes and the effect of the proviso is only to enlarge the scope of the definition of "sale" so as to include sales in which, though the property passes outside the State of Assam, the goods at the time of the contract have been actually delivered in the State of Assam for the purpose of consumption therein. The proviso does not exclude transactions in which the title to the goods passes within the State of Assam under the Sale of Goods Act, although the goods are despatched outside the State of Assam for consumption, from the definition of the word "sale". As regards the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as soon as the delivery was made within the State of Assam, the sale was complete and thus it was an inside sale. We do not think that there is any substance in this contention. The constructive delivery contemplated under section 39 is only relevant for the purposes of ascertaining the rights and liabilities of the purchaser and the seller inter se. It cannot fix the situs of the sale for the purposes of taxation. Even assuming that under section 39 for the purposes of the Sale of Goods Act, the delivery to the carrier will be deemed to be delivery to the purchaser, that by itself is not conclusive to hold that the sale was within the State of Assam and was not an inter-State sale. The sale from its very nature consists of various elements: the contract, the existence of the goods, the passing of the title of the goods and actual delivery of the goods. Prior to the coming into force of the Constitution, different States took any one of these elements of sale as its nexus for passing taxing legislation. The Constitution in order to avoid this confusion enacted Article 286(1) the effect of which was that the situs of a sale in which all the elements of the sale do not exist in one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that each clause of Article 286 is independent and even though the situs of a sale may be fixed under Article 286(1)(a), Explanation, still it will be affected by clause (2) of Article 286 so long as the ban was not removed by the Parliament. But the majority decision in the Bengal Immunity case(1) did not differ from the opinion of the majority in the earlier case of State of Bombay v. United Motors (India) Ltd. [1953] 4 S.T.C. 133; A.I.R. 1953 S.C. 252., in so far as it laid down the scope of Article 286(1) and the purposes behind enacting the same. The Advocate-General contends that the present sale cannot be regarded as an outside sale and therefore it was an inside sale and the State of Assam had power to tax such sale. Cases where all the elements of a sale are completed within one State cannot be regarded as an outside sale. But a sale where any one of the elements of the sale is to be found outside the State of Assam cannot be said to be a sale inside the State of Assam. In the present case, as we have already pointed out, the contract for sale took place in Calcutta, the price was to be paid in Calcutta and the goods were to be delivered outside the State of Assam for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta. This company had a common managing agent, namely, Messrs Martin Burn Limited with Messrs Burn and Co., Ltd. Both companies manufactured railway rolling stock including wagons. On 2nd July, 1951, the Railway Board placed an order with Messrs Martin Burn Limited as managing agents of the two companies for 3,500 wagons. The delivery was to be F.O.R. work siding of the company and the work was to be completed by 31st March, 1953. It was held that the sale of the wagons was of intra-State character inasmuch as the contract was made in West Bengal, the goods were manufactured in that State and the delivery was made inside that State and where also the payment ought to have been received. The contract was for delivery at the work siding of the manufacturing company within the State of West Bengal. It was held further in this case that the sale was in the course of inter-State trade, and as such, Article 286(2) would have been attracted, but as the sales were effected between 1st April, 1955, and 6th September, 1955, levy of tax was validated by the Sales Tax Laws Validation Act, 1956. The following passage at page 559 of the report in the judgment was relied upon in support of his con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "(1) Delivery F.O.R. Pollachi Junction; oil to be supplied during the month of February, 1951. Containers are to be supplied by Messrs Tata Oil Mills Company F.O.R. Pollachi Junction as usual." The course of business between the assessee and the purchasers was that the sale of the oil was "loose", the containers were supplied by the purchasers who sent their own drums to the assessee for the carriage of the oil. The seller checked up these containers and filled in at the assessee's mills. The drums were transported to Pollachi Junction and then loaded on railway wagons by the sellers who obtained railway receipts in the name of the buyers as consignors, the consignees being the same. On the instructions of the buyers all the oil sold under these contracts were routed to Ernakulam where they were cleared by the buyers and used in their mills. Ernakulam is situated outside the State of Madras. It was held by the Madras High Court under these circumstances that"the carrier was constituted an agent of the buyer for accepting delivery of the goods on his behalf with the result that the goods had 'actually been delivered to the buyer at Pollachi within the Madras State.' As the delivery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act consumed there, will not make the sale outside sale so far as the State of Madras was concerned. It was not contended in that case that the sale was not of an inter-State character inasmuch as none of the ingredients of the sale took place outside the State of Madras. The only point urged was that as the goods were actually consumed outside the State of Madras, it must be deemed as if actual delivery took place outside the State of Madras and section 7 of the Madras Sales Tax Act applied. Repelling this contention it was held that the actual delivery took place within the State of Madras when the goods were given to the carrier as the agent of the purchaser and thereafter despatched at the instance of the buyer to stations outside the State of Madras. The next case which is relevant to the consideration of the question is the case of Ram Narain Sons Ltd. v. Assistant Commissioner of Sales Tax[1955] 6 S.T.C. 627; A.I.R. 1955 S.C. 765.The appellant in this case entered into agreements with several mills situated outside Madhya Pradesh by which they undertook to purchase "kapas" in the various markets in Madhya Pradesh as their agents on their account and on their behalf. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the contention of the learned Advocate-General in the present case: "Suppose the goods are in the State of Madhya Pradesh at the time the contracts of sale of those goods are made in, say, the State of Bombay. Suppose further that the property in the goods has by reason of such sales passed in the State of Bombay but the goods as a direct result of such sales have been delivered for consumption in the State of Madras. According to the respondents, the President's order made under the proviso to Article 286(2) saves the transactions from the ban of Article 286(1)(a) read with the Explanation. Then the State of Madras will be able to tax by virtue of Article 286(1)(a) read with the Explanation or on the nexus theory by reason of the goods being delivered there for consumption; the State of Bombay will be able to tax because the title to the goods passed there; and the State of Madhya Pradesh will also be able to tax under the Explanation II to section 2(g) of the Act because the goods were in the State of Madhya Pradesh at the time when the contracts of sale were made in the State of Bombay. Nobody will say that the Constitution-makers intended to perpetuate multiple taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more of the bans imposed by Article 286.......Obviously, therefore, even on The Bengal Immunity decision(2) the assessments for the post-Constitution period in this case were hit by clause (1)(a) of Article 286 as also section 30(1)(a)(i) of the Act and were rightly held to be without jurisdiction." Section 30(1)(a)(i) of the Orissa Sales Tax Act corresponds to section 3-A of the Assam Sales Tax Act. On a careful consideration of these cases it will appear that a sale in which various ingredients of sale are spread over different States will be an inter-State sale and not an inside sale for any of the States in which any one of the ingredients exists. In these circumstances, the situs of the sale will be fixed in accordance with the provisions of Article 286(1)(a) read with the Explanation attached to it, and the only State where the goods are delivered for consumption may have the power to tax after the removal of the ban under Article 286(2) by the President. But for all other States it will be an outside sale. Cases where all the ingredients constituting a sale take place in one particular State stand on a different footing. Where the sale completely takes place at one plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him. No challenge was made to this statement in the order of the Assistant Commissioner before the Commissioner in revision. The Commissioner in dealing with this question in revision has observed as follows: "Regarding the second point, the burden of proof that sales were made to registered dealers in Assam lies with the petitioner but he never produced any document to show that the sales were really made to registered dealers inside the State of Assam. As a matter of fact, the petitioner did not press his claim for the deduction of Rs. 1,92,425 before the Assistant Commissioner of Taxes." This observation also indicates that it was not urged before the Commissioner that the statement of the Assistant Commissioner of Taxes in his appellate order that the point was not pressed, was incorrect. The point, therefore, cannot be said to arise out of the order of the Commissioner. Moreover, the question whether the assessee had sold the goods to a registration dealer who had mentioned these goods in his certificate of registration and further mentioned that the goods were intended for resale, is a question of fact which was within the competence of the assessing authority to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the amendment made in section 15. The requirement of rule 80 which could be insisted upon even after declaring the additions made by Assam Act IV of 1951 to section 15 ultra vires, cannot be said to have been declared ultra vires by the decision of this Court. Rule 80 reads as follows: "80. Production of documents in support of claims for deductions from gross turnover under section 15(1)(b).-(1) A dealer who wishes to deduct from his gross turnover the amount of sales on the ground that he is entitled to make such deductions under clause (b) of sub-section (1) of section 15 shall, on demand, produce in respect of such sales the copy of the relevant cash memo or bill according as the sale is a cash sale or a sale on credit, and a true declaration in writing by the purchasing dealer or by such responsible person duly authorised by the purchasing dealer in this behalf that the goods in question are specified in the certificate of registration of such dealer." Clause (2) of rule 80 then sets out the form of declaration. The rule only requires the assessee to produce a true declaration in writing of the purchasing dealer or by such responsible person duly authorised by the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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