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TMI Blog1958 (8) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... himself not only before the Sales Tax Authorities but also in his application before this Court under Article 226 of the Constitution and in his counter affidavit filed before this Court on the 5th December, 1956, are as follows: The petitioner owns chromite and manganese mines which lie in the State of Orissa and his main business consists in exporting chromite and manganese ores from those mines to foreign countries especially to the United States of America through Calcutta Port. The sales were effected through another company known as Messrs Chromite Corporation of India, Limited, who acted as the selling agents of the petitioner. The petitioner entered into two contracts with an American firm known as the Union Carbide and Carbon Corporation of New York on the 27th February, 1948, and the 21st December, 1948, for the sale of chromite ores and manganese ores respectively and one of the terms of the contract was that title should pass to the buyer when the ores were delivered by the seller on board the steamer at Calcutta-vide paragraph 5 of the petition in O.J.C. No. 15 of 1953. At the time of the aforesaid contracts of sale, the ores were in their natural state in the mines i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his observation is somewhat inaccurate, because on the findings of the lower authorities there was no sale between the petitioner and the Chromite Corporation of India and the latter merely acted as his selling agents. They took delivery of the goods from the petitioner at Barbil on his behalf and delivered them to the American firm at the time of loading the ores in the ship at Calcutta port. The sale was completed only at Calcutta where, according to the petitioner himself, title to the goods passed when the ores were delivered on board the steamer. But the liability of the petitioner to sales tax does not depend upon the completed transaction of sale taking place in Orissa, in view of the expanded definition given to that expression "sale" in section 2(g) of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947 hereinafter referred to as the Act). Hence, notwithstanding the somewhat inaccurate statement in the order of the Member, Board of Revenue, referred to above, the main question for consideration is whether on the facts as stated by the petitioner himself, he was liable to pay sales tax in respect of these transactions. 4.. The transactions took place in 1948-49 long be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat sale shall be deemed to be a sale in Orissa, for the purpose of assessment of sales tax. The contention of Mr. G.K. Misra appearing for the Sales Tax Department is based on a strict construction of the said proviso. He urged that on the petitioner's own admission when the contract of sale was entered into with the American firm the ores were inside the mines in Orissa. The completed sale subsequently took place when the ores were delivered on board the steamer at Calcutta to the American firm in pursuance of the said contract. By virtue of the second proviso to the said definition, therefore, the sale must be deemed to have taken place in Orissa, notwithstanding the fact that both the contract of sale and the actual sale took place in Calcutta and also notwithstanding the fact that the goods were sold for the purpose of export to the United States of America. Mr. Misra also relied on the recent decision of the Supreme Court in Tata Iron Steel Company's case[1958] 9 S.T.C. 267., where the constitutional validity of a similar deeming provision in the Bihar Sales Tax Act was upheld. The provisions of the Bihar Act and the Orissa Act are identical and the principles laid down by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, that the ores extracted from the mines were subjected to any subsequent processes outside Orissa so as to be in a deliverable state for the purpose of sale. This is a pure question of fact which the petitioner ought to have raised at the earliest stage. We must therefore assume that the ores were not subjected to any further processes outside Orissa but that when they were extracted from the mines in Orissa they may have been sorted out by mechanical processes so that only those high grade ores may be selected which contained the minimum percentage of chromium and manganese as required by the contract. The goods that were the subject-matter of the contract of sale should, therefore, be held to have existed in their natural state inside the mines at the time of the contract. It is true that at that time the ores had not been detached so as to constitute movable property, but only remained as part of the mines which may be immovable property. But section 6 of the Sale of Goods Act does not say that at the time of the contract of sale, the goods must exist as. "goods". There can be a contract of sale for future goods also. Hence, I am not inclined to accept Mr. Mukherji's argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed merely because of its incidental encroachment on a Central subject. 11.. In the aforesaid Supreme Court decision also there are some observations in support of this view. There also the second proviso to section 2(g) of the Bihar Act was attacked on the ground that in reality it was not a tax on sale of goods but was in substance a duty of excise which was an exclusively Central subject-vide item 45 of List I. Their Lordships repelled this argument by saying that "in essence it was a tax on sale and not a duty on goods manufactured or produced." The same reasoning would apply here, the only difference being that in Tata's case(1) [1958] 9 S.T.C. 267. , item 45 of List I was considered whereas here we are concerned with item 19 of the list. The whole question ultimately depends on what is the pith and substance of the impugned legislation. I think there can be no doubt that it is a tax on sale of goods which is an exclusively Provincial subject. 12.. As regards the quantum of the turnover for the purpose of assessment, the sum paid by the American firm namely Rs. 1,45,000 and odd should be taken to be the sale price. Messrs Chromite Corporation of India were only the selling ..... X X X X Extracts X X X X X X X X Extracts X X X X
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