TMI Blog2010 (10) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... . All the interim reliefs granted earlier stand vacated. The petitioners are accordingly directed to make payment of balance amount of taxes to the respondentState, as aforestated. In the result, all the writ petitions are liable to be and are hereby dismissed. - W.P. Nos. 2060, 58, 59, 130, 1917, 1918, 1919, 1920, 2665, 2666, 2667, 2685, 2686, 2687, 2691, 2692, 2693, 2694, 2695, 2696, 2700, 2701, 2702 and 2703 of 2002 - - - Dated:- 1-10-2010 - SATHISH K. AGNIHOTRI, J. ORDER:- SATISH K. AGNIHOTRI J. W.P. Nos. 2060, 58, 59, 130, 1917, 1918, 1919, 1920, 2665, 2666, 2667, 2685, 2686, 2687, 2691, 2692, 2693, 2694, 2695, 2696, 2700, 2701, 2702 and 2703 of 2002, W.P. Nos. 94, 97, 129, 176, 177, 277, 278, 393, 406, 407, 424, 675, 687, 846, 853, 884, 1115 and 2158 of 2003, W.P. (T) Nos. 5307, 5806, 6135, 6193, 6195, 6288, 6353, 6464, 6482, 6504, 6505, 6521, 6555, 6593, 6617, 6666, 6715, 6722, 6775, 6829, 6830, 6865, 6984, 6999, 7170, 7256, 7470, 7484 and 7593 of 2007, W.P. (T) Nos. 402, 403, 404, 405, 406, 407, 408, 409, 1405, 1406, 1407, 1408, 1409, 1410, 1411, 1412, 1413, 1414, 1415, 1416, 1417, 1418, 2599, 2600, 2812 and 6430 of 2008, W.P. (T) Nos. 947, 1589, 3309, 3785 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2595, 2620, 2621, 2649, 2694, 2697, 2699, 2700, 2701, 2706, 2707, 2708, 2727, 2730, 2752, 2755, 2757, 2758, 2759, 2767, 2783, 2786, 2787, 2842, 2870, 2881, 2886, 2887, 2919, 2920, 2944, 2946, 2947, 3000, 3005, 3007, 3019, 3032, 3055, 3056, 3057, 3058, 3069, 3080, 3081, 3086, 3093, 3094, 3097, 3098, 3156, 3205, 3275, 3287, 3288, 3289, 3306, 3307, 3375, 3376, 3391, 3401, 3402, 3408, 3427, 3470, 3525, 3526, 3527, 3528, 3529, 3556, 3576, 3577, 3579, 3705, 3754, 3757, 3758, 3759, 3776, 3798, 3905, 3907, 3908, 3914, 3915, 3970, 4013, 4029, 4135, 4505, 4524, 4533, 4536, 4539, 4540, 4542, 4577, 4578, 4666, 4667, 4695 and 4870 of 2010, involve a common question of law as to whether purchase of tendu leaves by the petitioners, who are registered exporters under the Chhattisgarh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 (for short, the Adhiniyam 1964 ) read with the provisions of the Chhattisgarh Tendu Patta (Vyapar Viniyaman) Niyamavali, 1966 (for short, the Niyamavali, 1966 ), falls within the definition of inter-State sale or intra-State sale. The facts, which are common, in brief, for disposal of this batch petitions, are that the petitioners are dealers of tendu leaves, registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Supreme Court in umpteen number of cases. It is apparent from the terms and conditions of the tender notice and the agreement that the sale of tendu leaves was for export to outside the State of Chhattisgarh. Shri Agrawal would next submit that the sale in the case on hand is inter-State sale. Even if contract of sale itself does not provide for the movement of goods from one State to another, but such movement was as a result of an incident of the contract. In support of his contention, Shri Agrawal placed reliance upon the decisions of Similipahar Forest Development Corporation Limited v. State of Orissa [1995] 96 STC 627 (Orissa), W. A. Shah Enterprises (P.) Ltd. v. District Forest Officer [2003] 129 STC 299 (Mad), Karnataka Soaps and Detergents Ltd. v. District Forest Officer [2005] 140 STC 112 (Mad). The petitioners are not free to export tendu leaves without TP-4 wherein the route and timing of the journey and destination is clearly provided. Condition No. 4 of annexure II of the tender notice, which was condition precedent for taking delivery of goods from the Federation, pursuant to sale of tendu leaves make it clear that sale was as a result of implied contract of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2009, W.P. (T) No. 4356 of 2009, W.P. (T) No. 4553 of 2009, W.P. (T) No. 4554 of 2009, W.P. (T) No. 5900 of 2009, W.P. (T) No. 6764 of 2009, W.P. (T) No. 6765 of 2009, W.P. (T) No. 6766 of 2009, W.P. (T) No. 454 of 2010, W.P. (T) No. 518 of 2010, W.P. (T) No. 2593 of 2010, W.P. (T) No. 2594 of 2010, W.P. (T) No. 3019 of 2010 and W.P. (T) No. 2595 of 2010, while adopting the submission made by Shri Agrawal, would submit that the petitioners required tendu leaves as raw materials for the purpose of manufacture of bidis in its manufacturing units situated outside the State of Chhattisgarh. The State monopoly has been created for sale and purchase of tendu leaves. The Federation has been appointed as an agent to function as a registered society on behalf of the State Government. The petitioners are registered as dealer under the Chhattisgarh Commercial Tax Act, Andhra Pradesh Commercial Tax Act and Maharashtra Commercial Tax Act and also registered as a dealer in the respective States under the CST Act. Shri Shrivastava would further submit that the petitioner submitted a tender for purchase of tendu leaves of various lots of different units. Being successful, the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 12A along with other sections of the Adhiniyam, 1964 would prescribe that an exporter of tendu leaves may only sell his share of tendu leaves outside the State and it would never possibly sell it inside the State. Any sale inside the State is in fact prohibited. The sale of tendu leaves by the Federation to the exporter is intricately connected with the movement of the said tendu leaves outside the State. Section 3 of the CST Act states that sale and purchase of goods shall be deemed to have taken place in the course of inter-State trade and commerce, if sale or purchase (a) occasions movement of goods from one State to another or (b) is effected by a person, by transfer of documents of title to the goods during movement from one State to another. It is next contended that whenever a sale of tendu leaves takes place inside the State between the Federation and the exporter, it is very well within the knowledge of the State Government that the goods shall move from State of Chhattisgarh to another State. Not only the State Government have knowledge that the goods would move but it exercises complete control over the goods by controlling every stage of movement of the goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners were meant for consumption or use outside the State of Chhattisgarh. Accordingly, the restrictions and control of the State Government and its agency continued till the tendu leaves are exported and transported beyond the territory of the State of Chhattisgarh. Clause 10 of the agreement provides that non-compliance of the conditions of the tender notice transportation/delivery and purchase condition will not render the purchase complete. Thus, the movement of tendu leaves from the State of Chhattisgarh to outside the State was inseparable from the sale of tendu leaves. Other learned counsel appearing for the different petitioners adopted the above-stated submissions made by Shri Agrawal, Shri Shrivastava, Shri Dubey and Shri Majumdar, learned counsel. On the other hand, Shri C.S. Vaidyanathan, learned senior counsel appearing with Shri D.S. Surana, Advocate-General and Shri A.S. Kachhwaha, Deputy Advocate-General for the State, would submit that if the movement of goods, from one State to another takes place independently of the contract of sale there being no compulsion or obligation under the contract to make such movement of goods then the sale will not be dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nilgiri Plantations Co., Conoor (Nilgiris) v. Sales Tax Officer, Special Circle, Ernakulam [1964] 15 STC 753 (SC); AIR 1964 SC 1752. In K. B. Saha and Sons Industries Pvt. Ltd. [2007] 7 VST 214 (SC); [2007] 9 SCC 97 the facts were different, as delivery of goods was made only after the TPs have been obtained. It appears that the attention of the court was not drawn to the ratio laid down by a Constitution Bench of the Supreme Court in State of A.P. v. National Thermal Power Corporation Ltd. [2002] 127 STC 280 (SC); [2002] 5 SCC 203. His next contention is that the purchase of tendu leaves in Chhattisgarh is materially different from that of in Orissa and in the case on hand, the sale is complete within the State. The movement of goods from Chhattisgarh to any other State is not pursuant to any express or implied stipulation in the contract. The contract does not oblige the purchaser to move the goods from Chhattisgarh to any other State. The learned senior counsel referred clauses: Clause 4, 4I(a), 4IV, 4V, 4VI, 4VIII Clause 6(b), 6(4), 6(5) Clause 8(I), 8(II) Clause 9 Clause 10 Clause 14c(b), 14c(c)(i), clause 18 Clause 20(1), 20(2) of the agreement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndu leaves and bring to collection centre. The procedure of sale is as under: The tenders for collection of tendu patta are called by Forest Department. The tendu leaves are auctioned on the basis of as it is where it is basis, i.e., the portion of the forest where tendu trees are found are allocated as lots all over the State and the purchasers are free to inspect those trees and leaves thereof for their assessment of quality of the leaves. The prospective purchasers/buyers are allowed pre-inspection of the area of forest containing tendu trees. After pre-inspection the tenders are called for lots and the purchasers bid in such tender for particular lots, on being successful in tender, the purchaser is bound to get those tendu leaves plugged from the trees. After the completion of the bid, the purchaser is required to enter into an agreement with the Federation. The agreement provides for purchase of entire tendu leaves by paying the entire amount in one stroke or by payment of the entire amount in 4 equal instalments. The tendu leaves are procured and stored by the purchaser under dual lock system, one key remains with the Federation and another with the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpreted that the processed tendu patta or movement thereof is as a consequence of sale. Having heard learned counsel appearing for the parties and perused the pleadings and the documents appended thereto, I propose to deal with the questions of law on the issue of inter-State sale, in respect of the facts of the instant case. Tendu trees are grown in forest. The tendu leaves are used for manufacturing of bidis and other similar products. The, then, State of Madhya Pradesh for regulating in the public interest the trade of tendu leaves by creation of State monopoly, enacted the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964, which obtained the assent of the President on November 3, 1964. On creation of State of Chhattisgarh, pursuant to the provisions of the M.P. Reorganization Act, 2000, the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 was adapted by the State of Chhattisgarh and it became the Chhattisgarh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 and became applicable in the State of Chhattisgarh, also. It is indisputable that the trade in tendu leaves would consist of dealing, i.e., in purchase and sale of those leaves. Transportati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 966 was framed, which was subsequently adapted by the State of Chhattisgarh. Under the provisions of rule 2(5) of the Niyamavali, 1966 the exporter of tendu leaves is defined as under: (5) 'Exporter of tendu leaves' means a person or party who exports tendu leaves outside Madhya Pradesh for his or its own use or sells tendu leaves to another person or party carrying on trade in tendu leaves at a place outside Madhya Pradesh; Under the provisions of rule 2(7) of the Niyamavali, 1966 the purchaser is defined as under: (7) 'Purchaser' means a person or party to whom tendu leaves have been sold by the State Government under section 12; Under the provisions of rule 2(11) of the Niyamavali, 1966 the transport permit is defined as under: (11) 'Transport permit' means a permit issued under clause (b) of sub-section (2) of section 5 for transport of tendu leaves; Rule 4 of the of the Niyamavali, 1966 provides for four types of transport permit (for short, TP ), namely; (i) for transport from collection depot to storage godown; (ii) for transport from one storage godown to another or to distribution centre; (iii) for transport from di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Federation. Condition No. 7(iii) provides, inter alia, for delivery of the leaves lot wise on either full payment or on payment by instalments. Normally, the payment of purchase price is made in four equal instalments one in October, second in mid November, third in first week of January next year and fourth in mid February next year. Condition No. 9 of the tender notice provides for delivery of leaves after the payment of the instalments in accordance with the provisions contained in annexures I and IV. Condition No. 1(xix) of annexure I of the tender notice defines the word tax payable . Tax payable means, vanijyik kar, forest development cess and other taxes/cess as leviable from time to time, on the purchase price of the tendu leaves in a lot. The sale of tendu leaves is on as is where is basis . Condition No. 5(v) provides that the tenderer must be registered under the Adhiniaym and Niyamavali as manufacturer/exporter on the date of submission of the tender and if successful, he must obtain registration certificate till the date of expiry of contract period. Condition No. 6 provides for payment of earnest money by every tenderer. Condition No. 11 provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed to have become part of this agreement and which shall be construed to have been specifically provided for in these presents. Clause 4 of the agreement provides for procedure for collection/ purchase and payment and delivery of leaves at collection centres. Clause 4 reads as under: 4. Procedure for collection/purchase and payment and delivery of leaves at collection centers. I. (a) The purchaser shall take the delivery of the green tendu leaves collected in the Primary Society Bhiragaon, which has been fully described in Schedules A and B, on all the collection centers given in Schedule B or any other additional center decided by Managing Director, District Union, within the next two days of the date of collection from primary society or any person authorized by the Managing Director, District Union. The purchaser will not obtain tendu leaves directly from collectors/producers after paying collection charges/purchase price. Note: The purchaser shall not raise any objection, if the leaves delivered by the society to him in the standard bundle of 50 leaves fit for manufacturing bidies, are less or more by 2 leaves. (b) The purchaser will take the delivery only o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the purchaser's agreement, Managing Director of the District Union in his discretion for the part or the whole quantity of the tendu leaves (i) Can refuse the delivery of tendu leaves to the purchaser. (ii) Can deliver the leaves to the purchaser only after recovering the supervision charges of ₹ 50 per standard bag. If the leaves are delivered later on after drying, bagging and transportation to the purchaser by Federation of primary society or district union as the case may be, then the purchaser in addition to supervision charges will pay the expenditure incurred on drying, bagging and transportation, etc., as decided by the Managing Director of the District Union whose decision shall be final and binding on the purchaser. (B) The Federation can dispose such leaves through sale and can recover the loss amount from the purchaser. VI. The purchaser shall not refuse to take the delivery of the tendu leaves offered by the primary society unless leaves are unfit for the manufacture of bidies. The leaves not accepted by the purchaser will be separately kept by the primary society and will be produced for inspection to Sub-Divisional Forest Officer/Divisional Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the purchaser, name of the phad, serial No. of the bag on the phad and number of bundles in the green colour on the bags provided by the District Union or purchased by himself. The purchaser will clearly write the serial No. of godown on each bag in black colour. Clause 6 of the agreement provides for procedure for payment of amount due and delivery of leaves. Sub-clause 1(a) of clause 6 provides that if the purchaser wants, he can remove the tendu leaves up to the notified quantity of the lot from the collection centres under transit pass issued as per the provisions of the Adhiniyam and Niyamavali. Sub-clause 1(b) of clause 6 of the agreement reads under: (b) If the purchaser does not want to get the leaves released from the phad after paying the full balance amount due and expresses the written desire to store the leaves in the godowns under double lock of purchaser and Federation to avail of the facility of the payment in instalments up to April 15, 2009 or 21 days from the date of purchaser appointment order whichever is later, he will be permitted to store the leaves in the godowns taken on rent by him in the State of Chhattisgarh, specially approved for this pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of tendu leaves. Clause 9 of the agreement of 2002 and clause 10 of the subsequent agreement provides for compliance of agreement to the effect that if the terms and conditions of tender notice pertaining to delivery and sale and of this agreement are not fully complied with it will be considered that the purchase of leaves has not taken place. In the original Hindi format in addition to delivery and sale the word transport has also been added before delivery . Clause 14 of the agreement provides for termination of the agreement on the grounds firstly; if the purchaser fails to pay the instalment before the due date and the last instalment within 15 days of its due or fails to comply with any provisions, the agreement may be terminated after giving 15 days notice and further after affording an opportunity of hearing to the purchaser, the purchaser may also be blacklisted for a period up to 5 years. Sub-clause (c) of clause 15 of the agreement provides for the steps to be taken after termination of the agreement. Clause 16 of the agreement provides for performance of duties, etc., by purchaser, i.e., acts and duties required to be done by him and shall abstain from doi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vement of tendu leaves outside the State of Chhattisgarh, is not acceptable. Clause 2 of the agreement, i.e., parts of the agreement provides that the agreement shall always be deemed to be subject to the provisions of the Adhiniyam, 1964 and the rules made thereunder . Thus, it cannot be held that the provisions of the Adhiniyam, 1964 and the Niyamavali, 1966 are parts of the agreement, but the agreement is conditional upon compliance of the provisions of the Adhiniyam, 1964 and the Niyamavali, 1966. Contention of Shri Vaidyanathan, learned senior counsel appearing for the State, that movement takes place as a result of other statutory or nonstatutory requirements but not as a result of an express or implied terms under the contract of sale, and the movement of tendu leaves was an independent transaction, merits acceptance. A Constitution Bench of the Supreme Court in Ben Gorm Nilgiri [1964] 15 STC 753 (SC); AIR 1964 SC 1752 held that to constitute a sale in the course of export of goods out of the territory of India, common intention of the parties to the transaction to export the goods followed by actual export of the goods to a foreign destination is necessary. But i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as it does not require movement of tendu leaves from the State of Chhattisgarh to outside the State of Chhattisgarh. As monopoly in transaction of tendu leaves is in favour of State (See Hari Om AIR 1987 MP 212), the State imposes reasonable restrictions on movement of various forest produces including tendu leaves at every stage. This is a requirement in case of manufacturers of bidis who take tendu leaves from the point of delivery to their respective units, also. Section 12A of the Adhiniyam, 1964, which provides for resale of excess quantity of tendu leaves, which are not taken either by the manufacturers of bidis or exporter of tendu leaves, the sale within State can be effected with the permission of the State Government or any officer as may be authorized in this behalf. This is again a regulation for sale and resale of tendu leaves. The restriction as contained in section 12A has no inextricable link between transaction of sale and movement of tendu leaves. The registration of the petitioners as exporter of tendu leaves is for the purpose of exporting tendu leaves outside the State of Chhattisgarh. After sale of tendu leaves, it can further not be held that it was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of leaves the petitioners (exporters) have to move the tendu leaves from the State of Chhattisgarh to outside the State of Chhattisgarh. The certificate of sale issued in form L under rule 9 of the Niyamavali, 1966 does not provide for movement of tendu leaves except name of the purchaser, name of the sale depot and unit, quantity sold/delivered (in standard bags) and date of sale/delivery. Clause 10 of the agreement provides for compliance of terms and condition of tender notice as well as the agreement pertaining to delivery and sale. According to the learned counsel appearing for the respective petitioners, there is one word transport also before word delivery . The compliance of transport/delivery and sale, are before sale is complete, not after sale has been complete. Thus, this clause is also of no assistance to the petitioners to establish that the sale obliges the petitioners to move tendu leaves outside the State. Form I, i.e., to maintain register of accounts of tendu leaves of manufacturer/exporter, is not relevant. Form J, i.e., to maintain statement of periodical return of tendu leaves and manufacturer/exporter and declaration by manufacturer/exporter un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 SC 1344 a Constitution Bench of the Supreme Court while considering sale or purchase to be inter-State sale held that in order that a sale or purchase might be inter-State, it is essential that there must be transport of goods from one State to another under the contract of sale or purchase . In Cement Marketing [1963] 14 STC 175 (SC); AIR 1963 SC 980, a Constitution Bench of the Supreme Court held as under (page 183 in 14 STC): 13. . . . Thus if the goods moved under the contract of sale, it cannot be said that they were intra-State sales. It was not the volition of the first appellant to supply to the purchaser the goods from any of the factories of the second appellant. The factories were nominated by the Government by authorisations which formed the basis of the contract between the buyer and the seller. Applying these tests to the facts of the present case we are of the opinion that the sales were in the nature of inter-State sales and were exempt from sales tax. In these circumstances the contracts of sale in the present case have been erroneously considered to be intra-State sales. A Constitution Bench of the Supreme Court in Singareni Collieries Co. Ltd. [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The long title of the Act recites that the Act was enacted for regulating 'the trade in tendu leaves' by creating a State monopoly in such trade. Trade in tendu leaves would consist of dealing in those leaves, i.e., their purchase and sale. Transport of the leaves once purchased or sold would not prima facie be an organic or integral part of dealing in those leaves. It is something extraneous to dealing in those leaves, something which takes place after the purchase or the sale thereof is completed and property in them has passed from the dealer to the purchaser and therefore does not form part of the trade in that commodity. That being so the restrictions on their transport contained in section 5 cannot be held to be the integral part of the trade monopoly but as ancillary or incidental thereto, made for its effective enforcement. If that be so, it affects the right of the purchaser under article 19(1)(f) to hold and to dispose of the goods he has acquired, a right which is not co-related, as the right under clause (g) is, with the monopoly which the section seeks to create. It follows, therefore, that such a provision would have to pass the test of reasonableness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 STC): 14. The decided cases establish that sales will be considered as sales in the course of export or import or sales in the course of inter State trade and commerce under the following circumstances: (1) When goods which are in export or import stream are sold; (2) When the contract of sale or law under which goods are sold requires those goods to be exported or imported to a foreign country or from a foreign country as the case may be or are required to be transported to a State other than the State in which the delivery of goods takes place; and (3) Where as a necessary incidence of the contract of sale goods sold are required to be exported or imported or transported out of the State in which the delivery of goods takes place. The facts of the aforestated case were that the dealers were required to move the trucks, buses chassis and other spare parts purchased by them from the State of Bihar to places outside Bihar. They were so required by the terms of the contracts entered into by them with the assessee. They would have committed breach of their contracts and incurred the penalty prescribed in their dealership agreements, if they had failed to abide by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pens is that there is a contract between the two parties in pursuance of which the goods move and when they are accepted and the price is paid the sale takes place. There would, therefore, hardly be any case where a sale would take place even before the movement of the goods. We would illustrate our point of view by giving some concrete instances: Case No. I. A is a dealer in goods in State X and enters into an agreement to sell his goods to B in State Y. In pursuance of the agreement A sends the goods from State X to State Y by booking the goods in the name of B. In such a case it is obvious that the sale is preceded by the movement of the goods and the movement of goods being in pursuance of a contract which eventually merges into a sale the movement must be deemed to be occasioned by the sale. The present case clearly falls within this category. Case No. II. A who is a dealer in State X agrees to sell goods to B but he books the goods from State X to State Y in his own name and his agent in State Y receives the goods on behalf of A. Thereafter the goods are delivered to B in State Y and if B accepts them a sale takes place. It will be seen that in this case the movement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Union Territory of Delhi. The determination of the situs of the sale was necessary to decide which of the sales tax authorities: that of Haryana or of Delhi could assess such sales. The State of Haryana contended that they were inter-State sales made at Faridabad while the Union of India contended that they were intra-State sales effected within the Union Territory of Delhi. In Indian Oil Corporation Ltd. v. Union of India [1981] 47 STC 1 (SC); AIR 1981 SC 446, the Supreme Court observed as under (page 5 in 47 STC): 6. Section 3(a) of the Central Sales Tax Act, 1956, provides that 'a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase occasions the movement of goods from one State to another'. It is now well-settled by a series of decisions of this court that a sale shall be an inter-State sale under section 3(a) if there is a contract of sale preceding the movement of goods from one State to another and the movement is the result of a covenant in the contract of sale or is an incident of that contract; in order that a sale may be regarded as an inter-State sale it is immaterial whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her. . . In K.B. Saha [2007] 7 VST 214 (SC); [2007] 9 SCC 97, relying on clauses 3.13 and 3.6 of the agreement between the dealer and the corporation, which reads as under (page 234 in 7 VST): 3.13 The successful tenderer shall pay security deposit at 25 per cent of the full purchase price of the lot(s) within 15 days of issue of ratification order provided that where the tenderer makes purchase for purpose of export outside India, he may, if he so elects and on furnishing the requisite papers in support thereof, tender the security deposit in the form of bank guarantee (B G) to the extent of 20 per cent of the full sale value of the stock purchased in the prescribed form valid for a period of not less than one year and the said BG shall be released after finalisation of the export deal. 3.6 Sale once finalised in favour of a tenderer cannot be transferred subsequently to any other person. Came to the conclusion that the sale was not complete, as tendu leaves were released after finalisation of the export deal. Accordingly, it was held that (pages 333 and 334 of 7 VST): 20. In order to decide whether sale is an inter-State it is sufficient that the movement of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion were 'inter-State sales' or 'local sales'. . . . . . 17. . . . Once it is found that the purchasing dealers were obliged under the contract(s) to take the chemicals to their respective territories outside Delhi, once it is found that the purchasing dealers were obliged to sell the chemicals in their respective assigned territories, once it is found that the said purchasing dealers were obliged to enter into separate contract(s) with the assessee, once it is found that each of the purchasing dealers were required to sell the chemicals in their assigned territories at the price fixed by the assessee and once it is found that each of the purchasing dealers was obliged to submit monthly reports to the assessee then in that event the mode in which each of the purchasing dealers could sell their goods either by way of stock transfer or inter-State sale or local sale becomes irrelevant. The obligation of the purchasing dealer(s) under the contract indicates the control of the assessee over the movement of the goods. The Division Bench of the High Court of Madhya Pradesh in Maharashtra Timber Laghu Udyog Mahasangh [1985] 18 VKN 195, wherein the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T): 30. Merely by issuance of transit passes to the purchasers, in our opinion, it would not be a case of inter-State sale. The purchase agreement (P/5) contained in Schedule IV in the case of sale of tendu leaves provides the detail, method of sale, delivery. It is nowhere contemplated that the goods were to move from outside the State of Madhya Pradesh expressly or impliedly nor it was incidental thereto. In our opinion, the sale of tendupatta is not inseparably connected with the movement. There is no relationship in cause of sale and effect of movement. Merely by the fact that the exporter licence is held by some of the dealers is not enough to make it a case of interState sale on the settled principles of law laid down by the apex court in various decisions. 31. There was stipulation in the agreement with respect to tendupatta for payment of commercial tax, forest development cess and any other tax, which was to form part of sale price without payment of these taxes, the payment of price shall not be deemed to have been made. In view of the aforesaid discussion, in our opinion, the liability of tax could not have been escaped by the petitioners. A common thread runn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction of sale, if the movement of goods takes place thereafter that would obviously be independently of contract of sale and necessarily not an inter-State sale. It is a trite law that by virtue of article 141 of the Constitution of India, the judgment of the Constitution Bench of the Supreme Court is binding on all the courts including the Supreme Court till the same is overruled by a Larger Bench. (See Official Liquidator v. Dayanand [2008] 10 SCC 1, para 75). The facts involved in this batch of cases came within the illustration as case No. 3 in Balabhagas Hulaschand [1976] 37 STC 207 (SC); [1976] 2 SCC 44, as in the cases on hand, the petitioners, registered as dealers in other States, have purchased tendu leaves in State of Chhattisgarh and thereafter, the tendu leaves were taken out to other States. This is purely an internal sale and the movement of goods is not occasioned by the sale but takes place after the property is purchased. After the tendu leaves are purchased by the petitioners, the same become their property. For the reasons and analysis aforestated, unhesitatingly, I hold that the purchase of tendu leaves was an independent transaction, which was ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
