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TMI Blog1975 (9) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The assessing officer was of the view that certain purchases of cereals made free of tax on the strength of the certificate of registration for resale in Orissa were converted into dal and, therefore, the declarations were violated and the assessee became liable under the proviso to section 5(2)(A)(a)(ii) of the Act. The purchase price of those goods so utilised was added to the taxable turnover of the assessee. The assessee had also purchased certain other goods on the basis of declarations furnished by him for resale in Orissa, but subsequently those were sold in the course of inter-State trade. The purchase price of those articles was also added on the same basis to its taxable turnover. 3.. The first appeals were dismissed. The Tribunal relying on a decision of this court in the case of Ram Chandra Badrinarayan v. State of Orissa[1974] 33 S.T.C. 83. (S.J.C. No. 326 of 1969 disposed of on 22nd August, 1972), held that there was no contravention when cereals purchased on the basis of declarations were converted into dal. The demand on that score was thus vacated. In regard to the other contention, the Tribunal held: "........In this regard it is contended that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Assistant Commissioner has observed that the appellant failed to produce any evidence. The onus in this regard is not on the appellant but on the department which makes the charge. Hence the contravention can be established only if the department had placed evidence that all those sales took place outside the State, that is to say, that the goods were not within the State of Orissa when the sales took place. There being no evidence, the charge of contravention inthis respect also fails." 4.. The learned standing counsel concedes that the dispute based upon conversion of cereals into dal has become final. Similarly he concedes that in regard to other items excepting biri dal, it is difficult, in the absence of clear evidence, to say that there is any contravention. In these circumstances, the only aspect surviving for examination is whether there has been any contravention of the declarations furnished by the assessee in regard to biri dal purchased from registered dealers on the basis of declarations. Section 5(2)(A) making provision for determination of taxable turnover as far as relevant reads thus: "In this Act the expression 'taxable turnover' means that part of a deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of "sale", it must be deemed that the sale took place within the State in regard to the goods. In the original Act of 1947, the definition of "sale" was in different terms. For convenience, it may be extracted: "'Sale' means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge: Provided that a transfer of goods on hire-purchase or other instalment system of payment shall, notwithstanding the fact that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale: Provided further that notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in Orissa at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, shall, wherever the said contract of sale is made, be deemed for the purpose of this Act to. have taken place in Orissa." Explanation (a)(i) appearing in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng examined by the Madras High Court in that case was slightly different from what has arisen in this case, but the principle appears to have full application. The court observed: "The course of transaction as described in the affidavit and which has not been traversed in the counter-statement is that Madurai Mills pursuant to the orders placed by the petitioner put the goods on rail destined to the States of Andhra Pradesh and Kerala and the price was paid in the State of Madras. Quite apart from section 4 of the Central Act, that will be an inside sale and also the first sale in the State. Even under the provisions of section 4, inasmuch as the goods were in this State when the contract of inter-State sale was entered into, it will be on that test too an inside sale, and in any case, it will be such a sale on the appropriation test." This decision has been upheld by the Supreme Court in the case of State of Tamil Nadu v. Madurai S.I. Corporation (P.) Ltd.[1972] 30 S.T.C. 401 (S.C.). The court observed: "...... It appears to us that when the cotton yarn was sold to the respondent in Madras as the goods were in the State of Madras when the contract of inter-State sale was ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the scheme under the Act collecting Orissa sales tax at the deferred point has not worked out, but in the facts of the case, it cannot be said that the assessee used the goods purchased by it for a purpose other than that specified in its certificate of registration which alone would attract the application of the proviso under which the additional demand has been raised. If the assessee as a fact resold the goods in Orissa, but on account of some supervening law that transaction is made taxable under some other Act and tax under the Orissa Sales Tax Act was not imposable, it would not amount to any violation of the declarations by the assessee. We agree with the contention raised on behalf of the assessee that the proviso cannot be applied to a case of this type. In our opinion, the Tribunal came to the correct conclusion in the matter. The ratio indicated by the Supreme Court in the case of Instalment Supply Ltd. v. Sales Tax Officer[1974] 34 S.T.C. 65 (S.C.). supports this view. 5.. Our answer to the question referred, therefore, is: On the facts and in the circumstances of the case, the Member, Sales Tax Tribunal, was correct in holding that even sales in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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