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TMI Blog1963 (4) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... nover at Rs. 5,24,457-36 and directed him to pay tax on that amount. He paid the tax. Subsequently after the close of the year in September, 1958, he filed an appeal before the Appellate Assistant Commissioner stating that he was not liable to pay any tax and that he was entitled to a refund of the tax as it was paid under a mistake of law. The Appellate Assistant Commissioner found that in pursuance of the contracts the assessee despatched goods to Kerala and that therefore it was an inter-State sale as defined in the Central Sales Tax Act, that the invoice and the demand draft clearly proved that the goods were appropriated to the contract at the assessee's place of business and that the assessee also adopted various safeguards to guarant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion that arises is whether the sales so made were sales in the course of inter-State trade. For deciding this question it is necessary to refer to the relevant provisions of the Central Sales Tax Act. Section 3 is as follows: "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- (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another." This section lays down the principles for determining when a sale or purchase shall be deemed to take place in the course of inter-State trade or commerce, because under the Act tax is imposed only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State." Their Lordships also observed at page 679 that section 3 has to be so construed that the two clauses in it are made mutually exclusive. It is clear from the facts of this case that the sales effected by the assessee come under section 3, clause (b), of the Central Sales Tax Act. The Tribunal has rightly held that the sales in question were interState sales under section 3, clause (b). The next question for consideration is which of the States is entitled to collect the sales tax in respect of the inter-State sale. Section 9(1) provides that the tax payable by any dealer under the Act shall be levied and collected i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of money against the bill or the demand draft and subsequently takes delivery of the goods. Thus the property in the goods passes and can only pass when the buyer pays the moneys and receives documents of title duly endorsed in his favour. That is the point of time when the sale can be said to be effected. It is beyond dispute that these incidents took place only in the Kerala State. We may refer to the following observations of the Supreme Court in Tata Iron and Steel Co. Ltd. v. Sarkar[1960] 11 S.T.C. 655 at p. 683.: " ..... a sale contemplated by section 3(b) is effected within the State in which the documents of title to the goods sold are transferred resulting in a transfer of the property in them; that State is the appropriate S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections appears, section 3 would prevail. Now these two sections define two kinds of sale, namely, a sale in the course of inter-State trade and a sale taking place outside a State. If a sale happens to come under both definitions, it would have to be taken as a sale in the course of inter-State trade for section 4 has been made subject to section 3. That being so, it would be impossible to hold that section 4(2) indicates where a sale falling under section 3(b) is to be held to have been effected." Again at page 685 their Lordships observe: "It would be legitimate to hold that similarly section 4 was enacted only for the purpose of formulating principles for determining when a sale is said to take place outside a State and not for any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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