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TMI Blog1975 (12) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... upra.), in respect of the assessment for the quarter ending June, 1960. The other five appeals are by the same firm in respect of the sales tax levied by the State of Orissa for the quarters ending December (sic), March, 1960, and December, 1960, to June, 1961, decided by the judgment of the High Court in S.J.C. Nos. 73-77 of 1968 dated April 27, 1970. As all the appeals involve a common point they were consolidated and have been heard together. Appeals Nos. 888-890 of 1974 have been filed by the firm M/s. Keluram Ramkaran in respect of the assessment of tax made by the State of Orissa for the quarters ending September 30, 1961, June 30, 1962, and September 30, 1962. These appeals arise out of the judgment of the High Court given in S.J.C. Nos. 70-72 of 1971 dated April 11, 1973. The High Court in these cases followed its previous judgment, which is the subject-matter of the six appeals mentioned above, and held that the levy was valid. The points of law arising in these appeals also are identical to the points arising in the other six appeals, referred to above, and in view of the common points of law involved in all these appeals we propose to dispose them of by one common judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersuade the Tribunal to make a reference. The appellants then moved the High Court of Orissa under section 24(3) of the Orissa Sales Tax Act to direct the Tribunal to make a statement of the case to the High Court. Accordingly the Tribunal referred the following points for consideration: "(1) Did title to the goods pass in Orissa or in West Bengal. (2) Even if title in the goods passed in West Bengal, whether, in the facts and circumstances of this case, the transaction constituted sale in the course of inter-State trade'." After considering the entire evidence and the circumstances and the law on the subject the High Court by its judgment dated April 22, 1970, negatived the plea taken by the appellants and held that although the title in the goods passed in West Bengal and the sale took place there, since the sale occasioned the movement of the goods from Orissa to West Bengal it was an inter-State sale and, therefore, it was clearly governed by section 3(a) of the Central Sales Tax Act. Thereafter the appellants moved the High Court for granting leave to appeal to this court, which having been rejected, the appellants filed an application to this court for grant of special lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer-firms in Calcutta; (4) that the goods were booked from Cuttack and Dhanmandal railway stations in Orissa to the railway sidings of the buyer-mills at Calcutta; and (5) that all the goods which are the subject-matter of the sales tax levy in all these appeals were ultimately accepted by the buyers at Calcutta and a concluded sale took place at Calcutta in West Bengal. In view of these admitted circumstances, we have to determine the legal position. To begin with, it would appear that the Central Sales Tax Act was passed in the year 1956 and before that there was some amount of controversy regarding the authority which was to levy tax in the case of inter-State trade. In Bengal Immunity Company Ltd. v. State of Bihar [1955] 6 S.T.C. 446 at 584 (S.C.); [1955] 2 S.C.R. 603 at 785., Venkatarama Ayyar, J., speaking for the court, quoted Rottschaefer on Constitutional Law (1939 Edition), where sale in the course of inter-State commerce was defined thus: "The activities of buying and selling constitute inter-State commerce if the contracts therefor contemplate or necessarily involve the movement of goods in inter-State commerce." The learned Judge also observed in that case: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude not only a concluded contract of sale but also a contract or agreement of sale provided the agreement of sale stipulates that there was a transfer of property or movement of goods. In Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash [1954] 5 S.T.C. 193 at 196 (S.C.)., quoting Benjamin on Sale (8th Edition), Venkatarama Ayyar, J., who spoke for the court, observed as follows: "The distinction between a sale and an agreement to sell under section 1 of the English Act is thus stated by Benjamin on Sale, Eighth Edition, 1950: 'In order to constitute a sale there must be- (1) An agreement to sell, by which alone the property does not pass; and (2) an actual sale, by which the property passes. It will be observed that the definition of a contract of sale above-cited includes a mere agreement to sell as well as an actual sale.' This distinction between sales and agreements to sell based upon the passing of the property in the goods is of great importance in determining the rights of parties under a contract." It would thus appear that this court clearly held that an agreement to sell by which the property did not actually pass was also an element of sale. Of course in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred." Section 4(1), therefore, clearly provides that a contract of sale of goods includes also an agreement to transfer property in goods to the buyer for a price. The inevitable conclusion that follows from the combined effect of the interpretation of section 3 of the Central Sales Tax Act and section 4 of the Sale of Goods Act is that an agreement to sell is also an essential ingredient of sale provided it contains a stipulation for transfer of goods from the seller to the buyer. This being the position if there is a movement of goods from one State to another, not in pursuance of the sale itself, but in pursuance of an agreement to sell, which later merges into a sale, the movement of goods would be deemed to have been occasioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either in pursuance of the agreement to sell nor is the movement occasioned by the sale. The seller himself takes the goods to State Y and sells the goods there. This is, therefore, purely an internal sale which takes place in State Y and falls beyond the purview of section 3(a) of the Central Sales Tax Act not being an inter-State sale. Case No. III.-B, a purchaser in State Y, comes to State X and purchases the goods and pays the price thereof. After having purchased the goods he then books the goods from State X to State Y in his own name. This is also a case where the sale is purely an internal sale having taken place in State X and the movement of goods is not occasioned by the sale but takes place after the property is purchased by B and becomes his property. Generally these are the only type of cases that can occur in the day-to-day commercial transactions. It is, therefore, manifest that there can hardly be a case where once a sale takes place the movement is subsequent to the sale. Mr. Hardy was unable to cite a single instance where such a contingency could arise and he accordingly submitted with his usual fairness that if no such contingency arose, then section 3(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sale takes place in the State where the goods are sent which must be different from the State from which the goods move. If these conditions are satisfied then by virtue of section 9 of the Central Sales Tax Act it is the State from which the goods move which will be competent to levy the tax tinder the provisions of the Central Sales Tax Act. This proposition is not, and cannot, be disputed by the learned counsel for the parties. Lastly, another aspect of the matter is that in order to determine whether a sale has taken place in the course of inter-State trade or commerce the matter has to be approached only after a concluded sale has taken place because unless the sale takes place or in other words the agreement to sell merges into a concluded sale the question regarding the application of the provisions of the Central Sales Tax Act does not arise at all because the tax is on sale and not on an agreement to sell or a forward contract. Finally, if all these conditions are satisfied the question whether the agreement to sell is in respect of ascertained or unascertained goods, existing or future goods, makes no difference whatsoever so far as the interpretation of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at does not make the letter a concluded sale because the letter read as a whole would show that it is in respect of some future goods which have yet to be grown. We are, however, unable to agree with the learned counsel for the appellants that this contract is in respect of unascertained goods because the quality and the colour of the jute, the weight, the price, the markings, etc., are all mentioned in the contract. Therefore the goods are no doubt ascertainable and must be according to the specifications mentioned in the agreement. This contract was entered into on April 1, 1960, and in some appeals a little later. A perusal of this contract also shows that the appellant undertook to send the goods from Cuttack to the buyers' mills siding in Calcutta and it is not disputed that after the jute was ready it was to be booked in bags from railway stations in Orissa to the mills siding of the buyers in Calcutta. It is, therefore, clear that the goods moved in pursuance of the terms of the agreement from the seller in Orissa to the buyer in Calcutta. It is also clear that the movement of the goods from Orissa to West Bengal forms a clear stipulation or incident of the agreement to sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Sales Tax Act. The appellant then relied on another decision of the Madras High Court in Larsen and Toubro Ltd., Madras-2 v. Joint Commercial Tax Officer [1967] 20 S.T.C. 150 at 186-187. To begin with, this case appears to have been overruled by this court in State of Madras v. N.K. Nataraja Mudaliar [1968] 22 S.T.C. 376 (S.C.)., on another point. Even so, we are unable to see how this case is of any assistance to the appellant. Veeraswami, J., as he then was, speaking for the court, observed as follows: "The essential tests of a sale or purchase in the course of inter-State trade, commerce and intercourse or import into, or export out of, the territory of India are, (1) whether there is movement of goods from one State to another or into or out of the territory of India, (2) whether such movement is occasioned by the contract of sale or purchase and (3) alternatively whether, during such movement, the sale or purchase is effected by transfer of documents of title to the goods." The learned Judge also observed: "A sale could be said to be in the course of inter-State trade only if two conditions concur: (1) A sale of goods, and (2) a transport of those goods from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Sales Tax Act." Similarly, in Tata Engineering & Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 S.T.C. 354 at 376 (S.C.); [1970] 3 S.C.R. 862 at 866., while describing the incidents of an inter-State sale, this court observed as follows: "A sale being transfer of property becomes taxable under section 3(a) 'if the movement of goods from one State to another is under a covenant or incident of the contract of sale'. " The same view was taken in a later decision of this court in M/s. Kelvinator of India Ltd. v. State of Haryana [1973] 32 S.T.C. 629 at 638 (S.C.); [1973] 3 S.C.C. 551 at 560., where Khanna, J., speaking for the court, observed as follows: "It is also plain from the language of section 3(a) of the Act that the movement of goods from one State to another must be under the contract of sale. A movement of goods which takes place independently of a contract of sale would not fall within the ambit of the above clause. Perusal of section 3(a) further makes it manifest that there must be a contract of sale preceding the movement of the goods from one State to another, and the movement of goods should have been caused by and be the result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the contract itself. It would be enough if the movement was in pursuance of and incidental to the contract of sale." We might mention here that the case cited above appears to be on all fours with the facts of the present case. In that case also the goods were supplied from Assam to Bihar through the pipe-lines in Assam to Barauni in Bihar. This court observed that no matter in which State the property in goods passes the sale undoubtedly occasioned movement of the goods which was sufficient to bring the case within the ambit of section 3(a) of the Central Sales Tax Act. Thus the authorities discussed above by us fully support the principles and the ratio laid down by us. We have already pointed out that even though the sale took place at Calcutta, as rightly found by the High Court, since the movement of goods preceded the sale in pursuance of the contract of sale which contained a clear stipulation that the goods were to move from Orissa to Calcutta in West Bengal, the movement of goods was occasioned by the sale itself which took place in Calcutta. In these circumstances, therefore, the High Court was legally justified in holding that in all these appeals the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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