1975 (7) TMI 135 - HC - VAT and Sales Tax

Issues Involved:
1. Determination of whether the impugned transaction envisages one sale in the course of inter-State trade or two separate sales.
2. Examination of the contractual obligations and their impact on the classification of the sale.
3. Application of Section 3(a) of the Central Sales Tax Act.
4. Analysis of relevant case law and its applicability.

Issue-Wise Detailed Analysis:

1. Determination of Whether the Impugned Transaction Envisages One Sale in the Course of Inter-State Trade or Two Separate Sales:
The primary question referred to the court was whether the transaction in question constituted a single sale in the course of inter-State trade or two separate sales, one within the State and the other inter-State. The Tribunal had held that the transaction envisaged only one sale in the course of inter-State trade, not exigible under the Orissa Sales Tax Act (O.S.T. Act).

2. Examination of the Contractual Obligations and Their Impact on the Classification of the Sale:
The assessee, a mine-owner, entered into contracts with the State Trading Corporation (the "corporation") to supply mineral ores to steel mills. The revenue argued that there were two sales: one from the mine-owner to the corporation (local sale) and another from the corporation to the steel mills (inter-State sale). The assessee contended that the corporation's contracts with the steel mills necessitated the movement of goods out of the State, thus making the sale an inter-State transaction under Section 3(a) of the Central Sales Tax Act.

3. Application of Section 3(a) of the Central Sales Tax Act:
Section 3(a) of the Central Sales Tax Act states that a sale is deemed to take place in the course of inter-State trade if it occasions the movement of goods from one State to another. The court reiterated the conditions for a sale to be considered in the course of inter-State trade:
- There must be a completed sale of goods.
- The sale should occasion the movement of goods from one State to another.

The court referenced the Tata Iron & Steel Co. Ltd. v. S. R. Sarkar case, which established that the movement of goods must be a result of a covenant or incident of the contract of sale.

4. Analysis of Relevant Case Law and Its Applicability:
The court analyzed the terms of the contract between the assessee and the corporation, which required the goods to be transported outside the State to satisfy preexisting contracts with the steel mills. The court found that the movement of goods was directly linked to the contract, fulfilling the conditions of Section 3(a) of the Central Sales Tax Act. The Tribunal's finding that the transaction was an inter-State sale was upheld.

The court also referenced the Kelvinator of India Ltd. v. State of Haryana case, which confirmed that the movement of goods must be under the contract of sale, and the sale and movement must be part of the same transaction.

Conclusion:
The court concluded that the transactions in question were exigible to Central sales tax and not liable under the Orissa Sales Tax Act. The Tribunal was correct in holding that the transactions envisaged only one sale in the course of inter-State trade or commerce. The reference was answered accordingly, with no order as to costs.

Separate Judgment:
B.K. Ray, J. concurred with the judgment, agreeing with the analysis and conclusion.

Reference Answered Accordingly:
The court's answer to the referred question was that the Tribunal was right in holding that the transactions envisaged only one sale in the course of inter-State trade or commerce and were not exigible to tax under the Orissa Sales Tax Act, but rightly assessed under the Central Sales Tax Act.

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