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TMI Blog1966 (9) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ication dated 28th September, 1957, the taxable point in respect of liquors was specified as the first sale in the State by a dealer who is not exempted from taxation under section 3(3). It is not claimed that the petitioner was exempted from taxation under section 3(3). Thus in respect of beer for the purpose of assessment for the year 1962-63, the taxable point was the first sale in the State and such single point tax was at 40 paise in the rupee. The Kerala General Sales Tax Act was passed repealing the General Sales Tax Act, 1125, with effect from 1st April, 1963. For the purpose of assessment for the year 1963-64, the Kerala Act is applicable. Under that Act also, the point of levy of tax on liquors other than toddy is the same. Beer, therefore, is taxable at the point of first sale in the State by a dealer who is not exempt under section 5, the charging section. For the assessment year 1963-64, the rate was enhanced from 40 per cent. to 50 per cent., i.e., 50 paise in the rupee. The question of exemption from sales tax raised in this writ petition relates only to the sales of the two brands of beer brewed in the United Breweries Ltd., Bangalore. The course of the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner's case is that for the period in question it was purchasing beer from McDowell Co., Shertallai, which were being purchased by M/s. McDowell Co., from the United Breweries Ltd., Bangalore. According to the petitioner, sales by United Breweries Ltd., Bangalore, to M/s. McDowell Co., were inter-State sales and the sales by McDowell Co., Shertallai, to the petitioner were the first sales in the State by a dealer who was not exempted under the relevant charging section, and therefore the sales by the petitioner to its customers were not first sales in the State, and were not liable to be taxed. Petitioner contends that the sales by McDowell Co., Ltd., were the first sales in the State, and therefore those sales alone will attract liability to tax and that McDowell Co., Ltd., Shertallai, had paid the tax in respect of the sales in question. 2.. The respondent held in his orders exhibits P-3 and P-4 that the sales by M/s. United Breweries Ltd., Bangalore, were to the petitioner, and therefore the sales by the petitioner to its customers were the first sales in the State, and therefore the petitioner is liable to be taxed. He found that the goods moved from Bangal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another." Section 5 of that Act is also relevant, and it reads: "5. (1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India." In order that a sale may be an inter-State sale, the movement of the goods from one State to another must have been occasioned on account of the sale. If under a contract of sale, movement of goods from one State to another is contemplated or if such movement is an incident of that contract, then the sale is an inter-State sale. The contention of the petitioner is that McDowell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of McDowell Co., Ltd. It was open to McDowell Co., Ltd., to divert the goods for any other purpose although the goods had been consigned in the name of the petitioner. The property in the goods did not pass to the petitioner until after the invoices were received by it and it cannot also be said that the movement of goods from Bangalore to Ernakulam was under any contract between the petitioner and the United Breweries Ltd., Bangalore. In support of the contention that the sales to the petitioner were inter-State sales, the learned Government Pleader placed reliance on the ruling reported in Khosla Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes[1966] 17 S.T.C. 473. In that case the assessee in question there entered into a contract with the Director-General of Supplies and Disposals, New Delhi, for the supply of axle-box bodies. The goods were to be manufactured in Belgium according to specifications and the D.G.I.S.D., London, or his representative had to inspect the goods at the works of the manufacturers and issue an inspection certificate. Another inspection was provided for at Madras. The assessee was entitled to be paid 90 per cent. of the price after inspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner and the transportation of the goods from Bangalore to Ernakulam instead of to Shertallai would not make any change in the legal character of the transactions. I think, the present case would come within the ambit of the principle in Gandhi Sons v. Sales Tax Officer[1963] 14 S.T.C. 304. The petitioners there purchased certain goods from the local market after receipt of orders for such goods from buyers in other States or outside India. The Court held that such purchases would not come under the Central Sales Tax Act, 1956, inasmuch as the purchases did not occasion the movement of the goods from the Kerala State. It was also held that the fact that the purchases were after securing the orders and before the despatch of the goods is not by itself sufficient to forge the causal connections between the purchases and the movement which are essential for earning the exemption provided. I hold that sales by the petitioner to its customers were not the first sales in the State and the sales are not liable to taxed. 6.. It was submitted by the learned Government Pleader that under section 3 of the General Sales Tax Act, 1125, it is open to the department to assess the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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