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TMI Blog2007 (7) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Learned counsel for the parties informed us that the questions of law raised in all these references are substantively the same and so we took up STR No. 4 of 1983 for hearing. Our opinion in this reference will govern the other references as well. The following three questions of law have been referred for our opinion: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sales made to M/s. New Bharat Chemical Industries and M/s Vaish Brothers by delivery of the goods ex-works at Najafgarh Road, Delhi, were in the course of inter-State trade or commerce liable to sales tax under the provisions of the Central Sales Tax Act, 1956? (ii) Whether, on the facts and in the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the chemicals were sold by the assessee to these dealers in Delhi, they could sell them only to their customers in the territories allotted to them, that is, in the State of U.P. and in Ludhiana. The Tribunal (in its order dated March 19, 1982) concluded that, under these circumstances, the sales were made in the course of inter-State trade and would attract Central sales tax. It appears that during the hearing of the case before the Tribunal, an oral prayer was made by the assessee to the effect that the matter may be remitted back to the assessing authority since part of the goods had been locally sold by the dealers. The Tribunal rejected the oral prayer and so the assessee filed a review/rectification application on which the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that the dealers are not under any obligation to remove or take away the goods to the territories outside Delhi and the sales are complete, as against the assessee, as soon as the delivery is given ex-works at Delhi. Learned counsel for the assessee cited several judgments before us including Endupuri Narasimham and Son v. State of Orissa [1961] 12 STC 282 (SC), Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras [1970] 25 STC 528 (SC) and Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 STC 354 (SC) but we find that these have been considered by a Constitution Bench of the Supreme Court in State of Bihar v. Tata Engineering & Locomotive Co. Ltd. [1971] 27 STC 127. The Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of clause (2), the territory in which the dealers could sell the goods was stated, and in so far as delivery of the goods is concerned, clause (7) of the agreement provided that all supplies would be made on ex-works basis and the dealer shall take local delivery of the goods at the factory gate and arrange to store them in their godowns in Delhi. In the event the dealer is desirous of transporting the goods to the territory outside Delhi, the assessee would charge freight charges and also be liable for Central sales tax. The contract between the parties clearly made out that the goods were to be moved outside Delhi and that was one of the conditions of the sale. A breach of the agreement resulted in a penalty on the dealer, that is, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of section 3 above was the subject of interpretation by the Supreme Court in Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207 in which the Supreme Court held that section 3(a) of the Act would be applicable if the following facts were established: (i) that there is a sale or purchase of goods, and (ii) hat the sale occasions the movement of goods from one State to another. If these two conditions are satisfied, the sale becomes an inter-State sale on which tax could be levied under the Central Sales Tax Act, 1956. The expression "occasions the movement of goods" was considered by the Supreme Court in K. G. Khosla and Co. (P) Ltd. v. Deputy Commissioner of Commercial Taxes, Madras Division, Madras [1966] 17 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the third question is concerned, it is possible, as contended by learned counsel for the assessee, that the dealers may have breached the terms of the contract and sold the chemicals in Delhi and not in the territories allotted to them. If that is the position, then the assessee would, of course, not be obliged to pay Central sales tax on the sale of those goods and as held by the Tribunal in the review/rectification order dated May 10, 1982, the assessee may adduce evidence before the assessing authority to show that the goods were locally sold by the dealers and had neither been transferred to branches outside Delhi nor sold in territories outside Delhi. No further orders are required to be passed in this regard except that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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