TMI Blog1995 (6) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the petitioners towards price of the goods. On November 18, 1992, the petitioners raised a bill on Jagannath Corporation, being the dealer in Kerala, in respect of the goods. The petitioners have also relied upon the consignee's copy of the consignment note which shows delivery of the goods from Calcutta to Kerala and a certificate issued by the mills concerned that delivery had been effected directly to the Kerala purchasers. The petitioners applied for the issue of the required number of declaration forms to the Commercial Tax Officer, Radha Bazar, Calcutta. The Commercial Tax Officer made the issue of sales tax declaration forms subject to the petitioners making payment of a sum of Rs. 85,39,641. According to the Commercial Tax Officer this was the amount of tax which was leviable in respect of the transaction in question under the Central Sales Tax Act, 1956 (referred to as "the 1956 Act"). The Commercial Tax Officer did not accept the fact that the sale by the petitioners of the goods to Jagannath Corporation in Kerala was a subsequent sale within the meaning of section 6(2) of the 1956 Act and was not entitled to an exemption as claimed by the petitioners but was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a title in respect of the goods in favour of the Jagannath Corporation after the sale was effected by the Dalhousie Jute Company to the petitioners; 3. The petitioners had adequate alternative remedy available to them under the statute. Reliance has been placed on the decisions of Titaghur Paper Mills Co. Ltd. v. State of Orissa reported in [1983] 53 STC 315 (SC); AIR 1983 SC 603, Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd. reported in [1985] 154 ITR 172 (SC) and Assistant Commissioner (Assessment), Sales Tax v. Duroflex Coir Industries Pvt. Ltd. [1992] 85 STC 150 (Ker) in this regard. In my view the writ petitioners must succeed and the petitioners be granted the reliefs claimed. "Sale" has been defined in section 2(g) of the 1956 Act which is quoted hereunder: "2(g) 'sale', with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hire-purchase or other system of payment by instalments, but does not include a mortgage or hypothecation of or a charge or pledge on g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of section 8, shall be exempt from tax under this Act:" There can be no doubt that the sale in question between the Dalhousie Jute Company and the petitioners was an inter-State sale, as it occasioned the movement of goods outside the State. The only dispute is whether there was a subsequent sale. The stand of the respondent-authorities is contradictory. The submission that there is no evidence of ownership having been transferred from the Dalhousie Jute Company to the petitioners, quite apart from not being borne out by the record, would also negative the conclusion of the Commercial Tax Officer that the petitioners were liable to pay the sales tax at 4 per cent in respect of the transaction in question. Because if the goods were not sold to the petitioners in the first instance there was no scope for the petitioners to sell the same to Jagannath Corporation. The second submission of the State respondent-authorities that there was no evidence of transfer of title to Kerala party after the sale was effected by the mill to the petitioners is also without substance. It may be noted that this second submission proceeds on the assumption that Dalhousie Jute Company, has in fact tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, under the law. There is no dispute as far as the facts are concerned. The only question was a question of law. In any event, in exercising the power under article 226 the courts had always considered whether the authority concerned had acted without jurisdiction. In my view, by misconstruing the provisions of section 3 read with section 6(2) of the 1956 Act the Commercial Tax Officer has wrongfully failed to exercise the jurisdiction vested in him by law. The decisions cited by the petitioners in this connection are also apposite. On the other hand, the cases relied upon by the respondents are distinguishable. The case of Titaghur Paper Mills Co. Ltd. [1983] 53 STC 315 (SC); AIR 1983 SC 603 dealt with a question of accuracy of assessment. In that context the Supreme Court felt that the matter should be determined by the authorities constituted under the statute. The case of Dunlop India Ltd. [1985] 154 ITR 172 (SC) is irrelevant. That case related to the grant of interim order and the considerations which should weigh with the court in granting interim orders in matters involving the revenue. The third case cited by the respondents, namely, Duroflex Coir Industries [1992] 85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere a sale of any goods in the course of inter-State trade and/or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods (a) to the Government or (b) to a registered dealer other than Government, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempted from tax under this Act. It has been provided that the dealer effecting such subsequent sale shall prove to the satisfaction of the authority that such sale is of the nature referred to in clause (A) or clause (B) of this sub-section. Mr. Dutta appearing for the appellants-State of West Bengal and others contended that it is evident that in order to claim exemption under section 6(2) of the Central Sales Tax Act, 1956, a sale of any goods in the course of interState trade or commerce must occasion the movement of such goods from one State to another or the sale has been effected by a transfer of document of title to such goods during their move ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners wherein they had claimed despatch of goods through transporter, for which the respondentwrit petitioners have mentioned the consignment note numbers and the dates, however, copy of the consignment notes were not produced. The respondentwrit petitioners were asked to produce all the copies of consignment notes by which goods were sent from West Bengal to other States. It was further asked that the respondent-writ petitioners should produce the evidence in respect of transfer of documents of title to the goods. The respondent-writ petitioners did not produce any evidence in respect of transfer of documents of title to the goods. But on the contrary the respondents made an application dated November 19, 1992, stating that no question of production of the endorsed copy of the consignment notes before the Commercial Tax Officer did arise. The Commercial Tax Officer thereupon took it that the writ petitioner-respondent was unable to produce any evidence in respect of transfer of documents of title to the goods. The Commercial Tax Officer accordingly held that the returns filed by the respondents were not correct and the entire claim for exemption under section 6(2) of the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods from West Bengal to Kerala, causing inter-State trade. In the present case the sale of goods was not effected by transfer of documents of title to the goods "during their movement" from one State to another nor was there any "subsequent sale" during such movement effected by transfer of title. Hence by no stretch of imagination sale to Kerala party can be said to be a sale under section 6(2) of the Central Sales Tax Act or that the sale can be said to be exempted. In this connection our attention was invited to the decision of the Madras High Court in the case of State of Tamil Nadu v. N. Ramu Bros. (Electricals) reported in [1993] 89 STC 481, paragraphs 9, 11, 12 and 16. It was held in that case that it is only if a subsequent inter-State sale is effected by transfer of documents of title to the goods during the movement of the goods from one State to another pursuant to an earlier inter-State sale, that such subsequent inter-State sale would be exempt under section 6(2) of the Central Sales Tax Act, 1956. If the subsequent sale is effected by any mode other than transfer of documents of title to goods, exemption under section 6(2) cannot be granted at all. N. Ramu Brot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to deliver the goods, stating that the carrier need not deliver the goods at Coimbatore but had to deliver them to the respective purchasers at different places in Tamil Nadu and collect the delivery charges from them on delivery of the goods. However, even though these letters looked like delivery orders, they could not be considered as documents of title to goods, coming within the definition under section 2(4), because even a delivery order which had been specifically mentioned in that definition, had to satisfy the requirements mentioned in the latter part of the said definition, viz., that it was used in the ordinary course of business as proof of possession or control of goods or as authorising its possessor to transfer or receive goods thereby represented. The authorisation letters could not be treated as documents of title to goods within the meaning of the said definition. Therefore, N. Ramu Brothers's sales in favour of the purchasers could not be said to have been effected by transfer of documents of title to goods. Their Lordships of the Madras High Court, however, held that the invoices also did not satisfy the requirements contained in the latter part of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar v.State Trading Corporation of India Limited reported in [1972] 30 STC 451 (Pat) there was supply of iron and manganese ore by State Trading Corporation to Hindustan Steel Ltd. The State Trading Corporation of India Ltd., was a registered dealer under the Central Sales Tax Act, 1956, and dealt in iron and manganese ore. It purchased iron ore from mine owners in Bihar on f.o.r. (free on rail) loading-station basis for selling it to the Hindustan Steel Ltd. for their units in West Bengal, Madhya Pradesh and Orissa. The contract between the assessee and the mine owners mentioned places outside the State of Bihar as the destinations of iron ore. Under the contract, the loading in the railway wagons was to be done by the mine owners and till such time as the goods reached the destination stations, the liability for demurrage or overloading or underloading of wagons or the goods not conforming to the specifications, remained with the mine owners. The assessee, State Trading Corporation of India Limited, claimed that the sales by the mine owners to it were inter-State sales within the meaning of section 3 of the Central Sales Tax Act, 1956 and the sales by the State Trading Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibility of transporting the ores outside Bihar and hence the sales to Hindusthan Steel Ltd. were deemed to be "subsequent sales". Mr. Chakraborty contended before us that the learned trial Judge was persuaded to quash the order of the Commercial Tax Officer for the following reasons: "(a) It may be mentioned at this stage that none of the documents disclosed by the petitioners have been questioned by the respondent-authorities, i.e., the appellants herein. (b) In my view the sale by the petitioner to the Jagannath Corporation must be a subsequent sale. This follows from the concept of sale and the principle that no one can transfer what he does not have. The documents of title in this case would be the "consignment notes". It is not disputed that the petitioner sold the goods to the Jagannath Corporation. The documents of title had in fact been transferred. (c) The insistence on the production of the consignor's copy of the consignment note was unwarranted. (d) The impugned order has been based on a misappreciation of law. It is ex facie contradictory and cannot be sustained. (e) There is no dispute as far as facts are concerned. The only question was a question of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate issued by the Jute Mills (first seller) on receipt of C forms to Joshi Jute Corporation (first buyer) and C forms obtained from the second buyer, i.e., Jagannath Corporation who would obtain E-II certificates from Joshi Jute Corporation and also triplicate copy of the E-II forms retained by Joshi Jute Corporation after issuing the E-II certificate to the second buyer Jagannath Corporation. As to how to prove the subsequent sale at the time of assessment Mr. Chakraborty contended that E-I certificate from Jute Mills, "C" forms from Jagannath Corporation and triplicate copy of E-II certificates issued to Jagannath Corporation ought to have been looked into. Clause (6) of rule 6 of the Central Sales Tax (West Bengal) Rules, 1958, specifically states that for proving exemption on subsequent sale, the selling dealer shall produce E-I, E-II and "C" forms at the time of assessment or within such further time as the prescribed authority may permit. Thereafter the Commercial Tax Officer's demand was in excess of his jurisdiction and against the provisions of law and as such the Commercial Tax Officer committed an error both of fact and of law. His erroneous omission result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of transactions from 1988 to 1992. With the affidavit-in-opposition in the appeal court from pages 37 to 80 of the paper book we are able to clinch the issue that the documents and nature of transactions are similar in all the years. These documents contained contract, shipping instructions and bills and invoices of Joshi Jute Corporation with outside buyers pertaining to subsequent sales. Mr. Chakraborty relied upon the following case laws to support the factum of subsequent sales: (i) Commissioner of Commercial Taxes, Bihar v. State Trading Corporation of India Limited reported in [1972] 30 STC 451 (Pat), (ii) Mewa Lal Kewal Kishore v. Commissioner of Sales Tax reported in [1974] 34 STC 110 (All.), (iii) Commissioner of Sales Tax, U.P. v. Mewalal Kewal Kishore reported in [1976] 38 STC 551 (All.), and (iv) Deputy Commissioner of Commercial Taxes v. Sarathi Agencies reported in [1990] 78 STC 126 (Mad.). Mr. Chakraborty on the other hand contended that the case law as reported in [1993] 89 STC 481 (Mad.) [State of Tamil Nadu v. N. Ramu Bros. (Electricals)] had no manner of application to the facts of the case since it was a case where there was no subsequent transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instance of the purchaser and the railway receipts were endorsed in favour of purchaser. The railway receipts were made in the name of the assessee who sent the foodgrains outside Uttar Pradesh. He got these railway receipts endorsed in favour of the Uttar Pradesh buyers and received the price in Uttar Pradesh. It was held by a Division Bench of the Allahabad High Court that inasmuch as the goods were sent after the assessee had contracted with the Uttar Pradesh parties for despatch of the goods outside Uttar Pradesh, it would be an interState sale. In any event inasmuch as the railway receipts were endorsed after the goods had been handed over to the railway and there was nothing to indicate that the goods had not moved, it would be a case covered by section 3(b) of the Central Sales Tax Act, 1956. It was held in this case that if the contract of sale occasions the movement of the goods or the title to the goods passes while they are in movement from one State to another, the sale is not a local sale but an inter-State sale. In the said case inasmuch as the goods were sent after the dealer had contracted with the Uttar Pradesh parties for despatch of goods outside Uttar Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and bills prepared by the mills as well as by Joshi Jute Corporation. From these documents it is absolutely clear that the transactions were all subsequent sales and Joshi Jute Corporation paid 4 per cent Central sales tax to the jute mills while jute goods were purchased and in the bills of Joshi Jute Corporation to the Cochin dealer, no sales tax has been charged. Therefore, a transaction which is a transaction of first inter-State sale coupled with subsequent sale, within the meaning of law as reasonably construed, cannot attract sales tax at two stages. Joshi Jute Corporation already paid sales tax 4 per cent to the jute mills from whom goods were purchased initially and it did not realise sales tax from second buyer at Cochin. It does not attract the Central sales tax over again. The Commercial Tax Officer of the appellant State ought to have been satisfied with the documents and the statements filed which unequivocally prove the contention of the Joshi Jute Corporation that the first sale between Dalhousie Jute Mill and Joshi Jute Corporation was inter-State sale by transfer of documents of title (consignment notes) and the second transfer by Joshi Jute Corporation to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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