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TMI Blog1969 (12) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... sh and then sold it to the assessee. There was a prior contract of sale between the company and the assessee and in consequence of it the kerosene oil moved into the State of Uttar Pradesh. It may be that property in the goods passed in Uttar Pradesh from the company to the assessee. But it is now settled law that for the purpose of deciding whether the movement of goods from one State to another has taken place as a covenant or incident of the contract of sale the question whether property passes in one State or the other is immaterial. It is sufficient that there is a contract of sale and as a covenant or an incident of that contract there is a movement of goods from one State to another. The decision of this court in Bhika Mal Musaddi Lal v. Commissioner of Sales Tax, U.P.[1963] 14 S.T.C. 770., relied on by the assessee does not help the assessee at all. That case does not decide that, if there is a contract of sale and consequent upon such contract goods cross from one State to another, the purchaser under that contract is not an importer. The court expressly pointed out: "Applying rule 2(d-1) to the facts of this case, we come to the conclusion that the assessee was the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s operandi between the parties: "(i) that the assessee in its capacity as the distributor of the company, placed on the company orders for the supply of kerosene and diesel oil. Such orders were booked by the company's representatives, (ii) that some of the supplies were made by the company from its depot at Agra while others were made from its stock outside Uttar Pradesh, (iii) that one of the recitals in the agreement of distributorship was: 'whereas the company has at the request of the distributor agreed to sell kerosene to the distributor at Firozabad or at such place or places, as the company may elect upon the terms and conditions hereinafter mentioned', (iv) that the stock supplied by the company from outside Uttar Pradesh (mainly from Bombay) was consigned to the assessee through rail and the relevant railway receipts were taken out by the company sometime in its own name and sometime in the name of the assessee, (v) that such railway receipts were sent to the assessee by the company through its bankers at Firozabad and the bank delivered the railway receipts after collecting payment of the company's relative bills from the assessee." There is no dispute about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sale (after the sale) as a direct result of which the goods were imported into Uttar Pradesh; and (c) in a case where the goods are imported into Uttar Pradesh otherwise than as a direct result of a sale, the dealer who makes the first sale after such import." Out of the four clauses of rule 2(d-1), clause (a) deals with a case where the goods are imported not for resale but for consumption. We are not concerned with that clause. The clauses which are relevant for our purposes are clauses (b) and (c). These two clauses apply when the goods are imported for resale. If the import takes place as a direct result of a prior sale, clause (b) applies and where the goods are imported without there being a prior sale, clause (c) applies. In either case, the importer is the dealer who makes the first sale after the import. On a further analysis, it appears that clause (b) contemplates two sales one which occasions the import and the other after the import. The former may be called the "import sale" and the latter the "local sale". It is the local sale which is taxable under the Act for the obvious reason that the import sale would be an inter-State sale and would be taxable under the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the property should be deemed to have passed to the assessee as soon as the company accepted the orders of the assessee to supply kerosene and diesel oil and placed the goods on rail. As regards the delivery of railway receipts to the assessee through the bank at Firozabad, his contention is that that procedure might have been adopted by the company for the purpose of securing the payment of the price of the goods without affecting in any way the passing of the property to the assessee. Mr. Brij Lal Gupta counters by saying that the goods in question were neither specific nor in deliverable state as contemplated by section 2(14) and 2(3) of the Indian Sale of Goods Act, and therefore, neither section 20 nor 46 of that Act would apply to the facts of the case. He reiterated that sections of the Indian Sale of Goods Act that were applicable were sections 23 and 25. I am of opinion that it is not necessary to decide these rival contentions of the parties. To my mind, it is wholly immaterial where the property passed. The only question that requires determination is as to whether the import of the goods in dispute was the direct result of a prior sale. To put it differently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion would depend on as to whether the movement of the goods from another State into Uttar Pradesh was the result of a covenant in the contract of sale or was a necessary incidence thereof. We do not have the contract before us but it seems to me to be quite clear that it was incidental to the contract that the stocks of kerosene and diesel oil would move from outside Uttar Pradesh to Firozabad. When a dealer of Uttar Pradesh places order for the supply of goods from another State for delivery in the home State, the movement of the goods from that State into Uttar Pradesh would be a necessary incident of such a contract of sale. The view that I have taken is directly supported by a decision of this court in Firm Rabhubar Dayal Kallu Mal v. State of Uttar Pradesh1955 A.L.J. 860. where Chowdhry, J., while dealing with the interpretation of rule 2(d-1), expressed the opinion that "all that clause (b) of that rule required was that the motive force behind the import should be none other than sale, the stage at which the sale takes place being immaterial." On behalf of the assessee, reliance was placed upon the decision of this court in Bhika Mal Musaddi Lal v. 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