TMI Blog1968 (3) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... n-resident principals as dealers within the meaning of section 14(a) of the Act. The petitioner has produced declared statement giving particulars about the purchases from such local agents, the date of receipt of the railway receipt, the date of collection of the railway receipt and the mode of payment for the value of such goods. In fact the relevant facts in the instant case were noted by this Court in Jain Jari Stores v. State of Madras[1962] 13 S.T.C. 220., which related to the year 1956-57. On appeal by special leave to the Supreme Court, the order of this Court was set aside and the proceedings remanded to this Court for disposal according to law. Whilst remanding the case, the Supreme Court in Jain Jari Stores v. State of Madras[1967] 20 S.T.C. 381 at 387. observed as follows: " We are of the view, having regard to the circumstances, that the case should be remanded to the High Court to determine the questions whether the agent of the non-resident supplier was the agent covered by the explanation to the definition of the word 'dealer' in section 2(b), whether the property in the goods purchased by the assessee passed within the State of Madras, whether the sale was effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly effected by the dealer by the non-resident dealer direct resident within the State to the buyer in this State (petiof Madras. tioner) who took delivery of the goods in all cases from the carrier. (iv) Whether such sale took The petitioner is the first place after the goods dealer who sold the goods after were imported within import. The sales by the nonthe State of Madras. resident dealers to the petitioner are in the nature of inter-State sales." He concluded that the nature of business and the mode of transaction for both the years 1956-57 and 1957-58 are the same. The matter thus comes before us on the report of the joint Commercial Tax Officer, Godown Division. .... The primordial consideration in the subject under review is to find whether the textile goods in question were sold by the petitioner after the same was subject to a first sale by a dealer who is residing in the State of Madras and after the said goods were imported into the State of Madras from outside. In cases like this it is the petitioner who intends to escape the clutches of the taxing net that should establish that the sales effected by him in relation to these goods were second sales. This is what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 thereto would apply. His case is that such inter-State transport of the goods in question, which were admittedly delivered to a carrier for transmission, commences at the time of such delivery and terminates at the time when delivery is taken from such carrier. He would therefore urge that the movement of the goods in question terminated only when the assessee took delivery of the goods and, therefore, notwithstanding the intermediate role played, part undertaken and assistance rendered by the agent, there is a conceivable nexus between the non-resident dealer and the assessee as regards the textile goods in question and therefore the sale by the assessee should be deemed to be the first sale. Mr. V.K. Thiruvenkatachariar, after tracing the historical development of inter-State trade and commerce resulting in the passing of the Central Sales Tax Act, 1956, would state that the word "import" appearing in the proviso to sub-section (2) of section 3 of the Madras General Sales Tax Act, 1939, was there even prior to the passing of the Central Sales Tax Act and therefore the word "import" in this Act has to be understood in its popular sense and not to be interpreted by referring to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby being entitled to the benefit of the exemption set down therein. The learned Government Pleader in any event states that section 3 of the Central Act having come into effect from January, 1957, the special concept as to movement by rail has to prevail from that date onwards and the assessee's transactions cannot be characterised as second sales on and from that date. Before we analyse the respective contentions, we would briefly state whether in the instant case it is necessary to restate the crystallised tests as summarised by legal decisions in the matter of the appreciation of a sale in the course of import or export or sale in the course of interState trade and commerce. The latest pronouncement on the subject, to which my learned brother Veeraswami, J., is a party is Larsen and Toubro Ltd. v. Joint Commercial Tax Officer[1967] 20 S.T.C. 150. There the Court observed: "The essential tests of a sale or purchase in the course of interState trade, commerce and intercourse or import into or export out of the territory of India are: (1) whether there is movement of goods from one State to another or into or out of the territory of India, (2) whether such movement is occasione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133., they have traced the historical background with such precision and accuracy that it is unnecessary to restate the same in this judgment. One aspect, however, which has been touched upon and which ground has not been covered is the scope of Explanation 1 to section 3(b) of the Central Sales Tax Act. We have already adverted to the view of the Law Commission that a sale or purchase effected by the transfer of documents during the movement of goods from one State to another, should be regarded as inter-State sales or purchases. But the Commission was confronted with certain suggestions and difficulties in taking that view. For the limited purpose of the principle mentioned above they desired to provide expressly as to when the movement of the goods is to be regarded as having commenced and terminated in cases where goods were delivered to a carrier for transmission to another State. It is to achieve this object in inter-State trade or commerce that Explanation 1 to section 3(b) of the Central Act has been incorporated. We are therefore unable to accept the contention of the revenue that the limited and special meaning attributed to such movement by rail under the Central Act sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. 40-41. : "Where an ultimate finding on an issue is an inference to be drawn from the facts found, on the application of any principles of law, there is a mixed question of law and fact, and the inference from the facts found is, in such a case, a question of law and is open to review by the Court." In this case, the reporting officer instead of examining thoroughly the evidence produced by the assessee, made an independent investigation and examined a partner of Shah and Company whose name was not even suggested to the assessee's partner when he was examined by him. It may be that the facts disclosed by Shah and Company may not collate with that spoken to and substantiated by the assessee. The reporting officer applied negative materials to positive data which by itself is not only erroneous but is obviously arbitrary. The modus operandi adopted by him violates the principle of natural justice in that the assessee was not given an opportunity to state his view about Shah and Company or to cross-examine the partner of Shah and Company. The ultimate finding given by the reporting officer which he has to rest after applying the correct law bristles with an error apparent on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of arguments a doubt was raised whether the agent in question is a dealer who is residing in the State of Madras. The proviso as it stood prior to the Amending Act (Madras Act XXIII of 1957) contained only the words "on the first sale effected in the State of Madras by a dealer". This was sought to be amended as doubts arose as to what constitutes the first sale by a dealer after import of the commodity. By the Amending Act, it was proposed to make it clear that the reference is to the first sale by a resident dealer after import. The Act was thus amended so as to levy additional tax on the first sale effected in the State of Madras by a dealer who is residing in the State of Madras. Before the Supreme Court, it was not disputed that the agent of the non-resident owner of the goods was residing in the State of Madras. This aspect therefore need not detain us. Whilst therefore determining the questions formulated by the Supreme Court, we answer that the agent of the non-resident supplier was the agent covered by the explanation to the definition of the word "dealer" in section 2(b), that the property in the goods purchased by the assessee passed within the State of Madras, that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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