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TMI Blog1976 (3) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... les coming under section 3(b) of the Central Sales Tax Act and that as the assessee has not furnished the required declarations in form C relating to these turnovers as required by the proviso, the sales are not entitled to the exemption under section 6(2). At that stage the Tribunal had also rejected the assessee's contention that, in any event, the inter-State sales in question could not be brought to charge as the sales of cotton are not liable to be taxed under the local Sales Tax Act and that the principle of the decision of the Supreme Court in Yaddalam Lakshminarasimhiah Setty and Sons' case [1965] 16 S.T.C. 231 (S.C.)., will apply to the facts of this case. The assessee later on filed an application before the Tribunal under section 55 of the Madras General Sales Tax Act for rectification of the mistake said to be apparent on the face of the record. In that petition the assessee pointed out to the Tribunal that in view of the decision of the Supreme Court in State of Kerala v. Pothan Joseph [1970] 25 S.T.C. 147 (S.C.)., (Civil Appeal No. 684 of 1967), the decision of the Tribunal that the inter-State sales will be taxable under the Central Sales Tax Act notwithstanding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year to the mills at Tirunelveli and Karur. The learned counsel for the assessee questions the assessment on the said turnover on three grounds: (1) The sales of cotton by the assessee to the said mills amount to inter-State sales only under section 3(a) and not under section 3(b) of the Central Sales Tax Act and that, therefore, the Madras State has no jurisdiction to assess the transactions in view of section 4(2)(b) of the said Act. (2) The assessee is entitled to the benefit of G.O. No. 3602, Revenue, dated 28th December, 1963, which exempts from tax sales of declared goods in the course of inter- State trade or commerce where tax has been levied or collected in respect of sales or purchases of such declared goods under section 4 of the Madras General Sales Tax Act, 1959. (3) The assessee is entitled to exemption in respect of the said turnover under section 6(2) of the Central Sales Tax Act. As regards the first contention, it is seen that the buyer-mills entered into an agreement with the assessee's branch at Coimbatore for the purchase of cotton. The assessee in his turn placed orders with the Bombay seller for the purchase of cotton and had directed h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 3(a) as having occasioned inter-State movement of the goods. But the sale by the assessee to the buyer-mills cannot be said to have caused the inter-State movement of the goods which in point of time should have started at least a moment earlier in pursuance of the assessee's contract with the Bombay seller. The mere fact that the goods were consigned by the Bombay seller to the buyer-mills as per the directions of the assessee will not make the transactions inter-State sales which have occasioned the movement of the goods. Even assuming that the assessee's sale to the buyer-mills contemplated movement of the goods from Bombay, it is not possible to say that the movement of the goods which has been occasioned by the sale between the Bombay seller and the -assessee is as a result or incident to the contract of sale which the assessee had entered into with the buyer-mills. Though the goods have been consigned by the Bombay seller to the buyer-mills direct in pursuance of the directions given by the assessee, in point of time, the sale by the Bombay seller to the assessee should be taken to precede the sale by the assessee to the buyer-mills. The Bombay seller by deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s preceding the inter-State transactions. In view of the fact that the assessee himself had not paid the tax under the said section 4, he is not entitled to the benefit of the said G.O. The G.O. contemplates a valid levy under section 4 on a person before he could claim exemption in respect of his inter-State sales. We, therefore, hold that the mere fact that the mills had paid the tax under the Madras General Sales Tax Act treating their purchases as local purchases from the assessee will not exonerate the assessee from payment of tax on his second inter-State sale unless he produces the required declaration forms in forms C and E-1. The third contention also is equally untenable. Section 6(2) of the Central Sales Tax Act lays down that where a sale is in the course of inter- State trade or commerce of goods of the description referred to in sec- tion 8(3) 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 to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under this Act. But the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant. The appellant then endorsed the same in favour of the mills after collection of the substantial portion of the sale price. The appellant contended that the consignments were sent directly by the Bombay seller to the mills and, therefore, these were direct inter-State sales by the Bombay seller to the mills and that the property in the goods passed to the mills when the goods were loaded at Bombay. The sales tax authorities found that the mills were the last purchaser and, therefore, these were inter-State sales between the appellant and the mills. A most significant feature is that the railway receipts were sent by the Bombay seller to the appellant, and the appellant thereafter endorsed the same to the mills. It is, therefore, apparent that there could not be an unconditional appropriation of the goods at Bombay towards the contract entered into between the appellant and the mills. The property in the goods passed only when the mills took delivery of the railway receipts from the appellant. The Bombay seller dealt with the railway receipts in such a way that it is proved that the intention of the appellant to part with the goods in any event is not until substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 6(2) of the Central Act. Section 6(2) of the Central Act lays down that where a sale in the course of inter-State trade or commerce of goods of the description referred to in section 8(3) of the Central Act has occasioned the movement of 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 to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under the Act. A dealer claiming exemption for subsequent sale during the movement of goods from one State to another is required by section 6(2) of the Central Act to furnish to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer by whom the goods were purchased containing the particulars. In the present case, the appellant would be entitled to exemption on production of appropriate form by the Bombay seller and by showing that the buyer is a registered dealer. The appellant produced the form from the Bombay seller but did not prove that his buyer was a registered dealer in cotton. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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