TMI Blog1982 (10) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... n question which were lying in the Sabarmati Railway Yard were not ascertained and specific and they were not in a deliverable state. Between 13th March, 1973, i.e., the day on which the auction was held, and 17th March, 1973, the applicantcompany instructed the railway authorities at Sabarmati to weigh the goods in question and to arrange for their delivery at Bombay. The railway authorities thereupon despatched the goods in question to the applicant-company in two lots by loading them in two motor trucks on one occasion, and in one motor truck on another occasion. Goods weighing 16,174 kgs. (as weighed on beam scale) were despatched in two motor trucks bearing Nos. M.R.R. 8564 and G.T.D. 5049 on 17th March, 1973. Goods weighing 3,826 kgs. (as weighed on beam scale) were despatched in motor truck No. G.T.A. 3128 on 27th March, 1973. According to the applicant-company, after the goods were loaded in the trucks and weighed for being despatched to Bombay, the price thereof was determined and paid by the applicant-company to the railway authorities. At the time of the despatch of the goods in the two above-mentioned lots, the railway authorities issued two "sale issue notes", which, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of determination dated 19th April, 1978, answered in the affirmative all the questions set out above. In other words, the determination was entirely against the applicant-company. The view of the Deputy Commissioner was that the purchase of the goods in question was completed before they were loaded in the truck by the railway authorities under instructions of the applicant-company and that, therefore, the transaction of purchase must be regarded as having taken place within the State of Gujarat. The Deputy Commissioner was also of the opinion that the applicant-company was a "dealer" in regard to the goods in question within the meaning of sub-section (10) of section 2 of the Act, even though there was a single isolated transaction of purchase of such goods by or on its behalf within the territory of the State of Gujarat and that since the turnover of purchase had exceeded the relevant limit specified in sub-section (4) of section 2 of the Act, the applicant-company was liable to pay purchase tax under section 15 of the Act. The Deputy Commissioner further held that the applicant-company was required to be registered under the Act. The applicant-company feeling aggrieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1973, before the sale was complete, to send the goods from Sabarmati to Bombay, and the Western Railway had, pursuant to such instructions, packed and weighed the goods after loading them in the trucks and despatched them to Bombay, there was a conceivable link between the movement of the goods from Sabarmati to Bombay and the contract of purchase. In the aforesaid view of the matter, the Tribunal held that the purchase of the goods in question was in the course of inter-State trade and that it was not liable to levy of purchase tax under section 15 of the Act. The Tribunal found in the alternative that if the disputed purchase was to be regarded as a local purchase governed by the provisions of the Act and not a purchase taking place in the course of inter-State trade or commerce within the meaning of section 3(a) of the Central Act, then the applicant-company was a "dealer" within the meaning of section 2(10) of the Act in regard to the purchase of the goods in question because the transaction was in connection with its business within the meaning of section 2(4)(i) of the Act, and that on such turnover of purchase the applicant-company was liable to pay purchase tax under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the assessee (applicant-company) was liable to pay purchase tax under section 15 of the Gujarat Sales Tax Act, 1969, on the balance amount of Rs. 1,95,600 after deducting the amount of Rs. 30,000 by way of the said Act from the total purchase price of Rs. 2,25,600 (sic)? (6) Whether, on the facts and in the circumstances of this case, the Tribunal was right in law in holding that the assessee (applicant-company) was merely entitled to a deduction of Rs. 30,000 under section 3(2) of the Gujarat Sales Tax Act, 1969, and not the entire amount of the purchase price of Rs. 2,25,600 which represented the disputed transaction of purchase?" Be it stated that questions Nos. (1) and (2) are referred at the instance of the revenue, and questions Nos. (3) to (6) are referred at the instance of the applicant-company. For the reasons which follow, we are of the view that question No. (1) set out above requires to be answered in the affirmative, i.e., in favour of the applicant-company and against the revenue. Under the circumstances, it is not necessary for us to express any opinion on the remaining questions, since they are rendered academic. Section 3 of the Central Act reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Union of India v. K.G. Khosla Co. Ltd. [1979] 43 STC 457 (SC), Indian Oil Corporation Ltd. v. Union of India [1981] 47 STC 1 (SC) and South India Viscose Ltd. v. State of Tamil Nadu [1981] 48 STC 232 (SC). Having considered the true import of section 3(a) of the Central Act, it would be necessary to consider the true effect of sub-section (2) of section 64 and sections 20 and 23 read with section 62 of the Sale of Goods Act, 1930, which too have a bearing on the decision of the question under consideration, since the purchase in the instant case had taken place at an auction sale. Sections 64(2), 20, 23 and 62 of the Sale of Goods Act read as under: "64. In the case of a sale by auction- (1) .............................. (2) the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; and, until such announcement is made, any bidder may retract his bid; ......................................." "20. Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch sale. The property would not simultaneously pass, however, if the goods sold at the auction are non-specific or unascertained goods or the auction sale is conditional. In the case of a sale of unascertained goods by description at an auction, the property in goods will pass upon unconditional appropriation of the goods of that description and in a deliverable state to the contract, either by the seller or the buyer, but with the assent of the other. Such assent may be express or implied and prior or subsequent to the appropriation. The delivery of goods pursuant to the contract by the seller to the buyer or to a carrier or other bailee for transmission to the buyer without reservation of right of disposal must be treated as an unconditional appropriation of the goods to the contract. It must be remembered, however, that section 64 is subject to a contract to the contrary. Section 62 is attracted even in regard to auction sales to which section 64 applies. The rights, duties and liabilities arising under a contract of sale by implication of law spoken of in section 62 refer to the rights, duties and obligations referred to in Chapter III of the Sale of Goods Act, 1930, which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to be sold at the auction because the relevant goods were not segregated and weighed at that time. The appellant appeared to have merely offered to buy and the Western Railways to have accepted the appellant's offer and to have agreed to sell the relevant metal at the rate of Rs. 11,280 per metric ton. Therefore, the actual quantity of price payable by the appellant in respect thereof depended entirely upon the weighment of the goods which was to be made subsequently. It is, therefore, clear that at the time of auction, the goods were neither ascertained nor weighed and the amount of price payable for them was also not agreed upon though the rate was agreed upon. Therefore, the 'sale' could not be said to be complete till the goods were actually ascertained and weighed." "................. it was only on 27th March, 1973, that the Western Railways had completed weighment of the entire quantity of 20 metric tonnes of goods which the appellant had agreed to buy as unascertained goods at the auction held on 13th March, 1973. But the manner in which the authorities of Western Railways had packed, loaded and weighed the goods in question is important because it throws a ring of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er express or implied. In that connection, the Supreme Court appeared to have liberalised the law by saying that for the invocation or application of section 3(a) of the Central Act, it would be enough even if the movement of goods from one State to another is incidental to the contract of sale or purchase or even if the buyer is able to merely establish 'a conceivable link' between the movement of goods and his contract of purchase and if 'such a nexus is otherwise inexplicable' on the facts and circumstances of a given case. We have already found that on the facts and in the circumstances of the present case, we are satisfied about the existence of the required 'conceivable link' in favour of the appellant and regarding the presence of the nexus, as appearing on record, between the movement of the goods and the appellant's contract and which nexus was 'otherwise inexplicable' in the light of facts present in the instant case..........." ".............. We are inclined to hold that for the reasons abovestated, the appellant's purchase was an inter-State purchase covered by section 3(a) of the Central Act and not a local purchase governed by the provisions of the Gujarat Act, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale in respect of the goods in question came into existence on 13th March, 1973, though the property in goods passed to the applicant-company later, that is, on 17th March, and/or 27th March, 1973. Now, the other material facts found by the Tribunal in the instant case are as follows: (1) The applicant-company is carrying on business of manufacturing and selling ferrous and non-ferrous metals at Bombay which is a place outside the State of Gujarat. (2) The applicant-company does not carry on any business at any place within the State of Gujarat. (3) The purchase of the goods in question at the public auction was a solitary business transaction entered into by the applicant-company within the State of Gujarat. (4) After the applicant-company's bid was accepted at the public auction, but before the goods were ascertained and specified and put in a deliverable state, the applicant-company instructed the railway administration to despatch the goods from Sabarmati to Bombay, and the railway administration agreed to honour such instructions. (5) Pursuant to such instructions, the railway authorities despatched the goods from Sabarmati to Bombay in two lots after packing, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has found that there was no prior stipulation between the Western Railway and the applicant company in the contract of sale itself providing for the despatch of goods from Sabarmati to Bombay, the movement of goods could not be held to have taken place pursuant to or consequent upon such contract and that, therefore, the purchase could not be held to have been effected in the course of inter-State trade. We are unable to agree, for, as earlier pointed out, the law does not require that for the purposes of attracting the provisions of section 3(a) of the Central Act, the contract of sale must itself make provision for or occasion the movement of the goods. Reference may be made in this connection to the decision in Union of India v. Khosla Co. Ltd. [1979] 43 STC 457 (SC). The facts there were that the respondent-company having its head office in the Union Territory of Delhi, carried on the business of manufacturing air compressors and garage equipment in its factory at Faridabad within the State of Haryana. Orders for the supply of goods from various parties were received by the respondent-company at its head office in Delhi. The head office drew out a production pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that clauses (a) and (b) of section 3 are mutually exclusive but differed from it and held that 'a sale can occasion the movement of the goods sold only when the terms of the sale provide that the goods would be moved; in other words, a sale occasions a movement of goods when the contract of sale so provides'.......... In a recent decision of this court in Oil India Ltd. v. Superintendent of Taxes [1975] 35 STC 445 (SC), it was observed by Mathew, J., who spoke for the court, that: (1) a sale which occasions movement of goods from one State to another is a sale in the course of inter-State trade, no matter in which State the property in the goods passes; (2) 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; and (3) 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. The learned judge added that it was held in a number of cases by the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
