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TMI Blog1975 (7) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... -one by the mine-owner to the corporation which is completed within the State and is exigible to sales tax under the Orissa Sales Tax Act and the other by the corporation to the steel mills which is exigible under the Central Sales Tax Act. The assessee contends that the corporation had preexisting contractual obligations with the steel mills and with a view to satisfying such existing contracts made purchases from the dealer. The contracts of the corporation with the dealer postulated movement of goods outside the State directly bringing the transactions within the purview of section 3(a) of the Central Sales Tax Act. Therefore, what may have otherwise been a local sale must be taken to be a sale within the purview of section 3(a) of the Central Sales Tax Act. While the assessing officer did not accept the contention of the assessee, the first appellate authority did and held that the transactions between the assessee and the corporation were exigible to Central sales tax only. The State went up in appeal before the Tribunal and the Tribunal concurred with the findings of the first appellate authority. 3.. In the supplementary paper book, the contracts between the assessee and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion may be an inter-State sale if the conditions prescribed in section 3(a) are fulfilled. But in order that such sale would come within the ambit of inter-State trade or commerce, the movement of the goods must be the result of a covenant or an incident of the contract of sale. In this case, if the jute mills in West Bengal would have rejected the goods and would not have appropriated them to the contract, there would be no transfer of title and, consequently, no sale, as 'sale' within the meaning of section 2(g) of the Central Sales Tax Act does not include a mere agreement to sell. In such a case, neither Orissa nor West Bengal could tax an agreement to sell. But the position is different where the agreement to sell unascertained goods ultimately matures into a completed sale which involves transfer of property. In this case, ultimately the goods were approved at the siding of the mills and accordingly there was a completed sale. Even though title to the property passed in West Bengal and the sale was completed there, the transaction would be taxable as a 'sale in the course of inter-State trade or commerce', because the movement of the jute from Orissa to West Bengal was the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of the Central Sales Tax Act, because under the contract, movement out of the State of the commodity sold is envisaged. The Tribunal on an analysis of the terms of the contract has recorded a finding which directly brings it within the tests indicated in the decisions referred to above; Accordingly, it must be held that the sales in question are exigible to Central sales tax and are not liable to be taxed under the Orissa Sales Tax Act. Our answer to the question posed by the Tribunal, therefore, shall be: "In the facts and circumstances of the case, the Tribunal was right in holding that the transactions envisaged only one sale in the course of interState trade or commerce and, as such, were not exigible to tax under the Orissa Sales Tax Act and have rightly been assessed under the Central Sales Tax Act." We make no order as to costs of these reference applications. B.K. RAY, J.-I agree. Reference answered accordingly. Appendix [The judgment of the Division Bench of the Orissa High Court consisting of G. K. MISRA, C.J., and S. ACHARYA, J., in Balabhagas Hulaschand v. State of Orissa (S. J. C. No. 41 of 1968), delivered on 22nd April, 1970, is printed below: ] BALABHAGAS H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s letter was produced before the Tribunal and is a part of the paper book. It is the common case of the parties that the terms and conditions enumerated in this letter governed the terms and conditions under which the transactions were effected during the quarter ending 30th June, 1960. The statement of facts has been made on the basis of the terms mentioned in letter dated 1st April, 1960, addressed to the petitioner by the licensed broker, which are more or less to the same effect. It is mentioned therein that 90 per cent of the payment was to be made in cash against documents and the rest on approval. 3.. The assessing authorities up to the stage of the Tribunal were of opinion that there was sale of jute in the course of inter-State trade. Being aggrieved the petitioner asked for a reference. It was rejected. Thereafter the petitioner moved this court which in exercise of its jurisdiction under section 24(3) of the Orissa Sales Tax Act called upon the Tribunal to make a statement of the case. That is how this reference has been made. 4.. The points which arise for consideration in this reference are: (1) Did title to the goods pass in Orissa or in West Bengal? (2) Even if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation.-Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of this sub-section shall apply as if there were separate contracts in respect of the goods at each of such places." Section 4(1) of the Act lays down the principle as to when a sale of goods can be said to take place outside a State. The prescriptions in section 4(2) must first be applied to determine whether a particular sale is inside a State. If it is inside a particular State, it must be outside all other States, as laid down in section 4(1). Section 4(2)(b) deals with unascertained or future goods. In the case of unascertained or future goods the sale shall be deemed to have taken place inside a particular State at the time of their appropriation by the buyer where the buyer retains the condition to give his consent in the matter of such appropriation. In the present case, the buyer reserved his right of appropriation of the unascert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application of section 4, sub-section (2), in cases where the goods sold are unascertained or future goods, there will be difficulty in ascertaining the place where the sale is effected, has also no force. In any event, section 4(2) may not be denied its full operation, merely because difficulty may be encountered in some cases in ascertaining the place where it is effected by the application of the rules set out therein." (Page 672) The underlined* expressions in the passage quoted above (at page 667) shows that title in the goods may pass either in Orissa or in West Bengal, and yet the transaction may be an inter-State sale if the conditions prescribed in section 3(a) are fulfilled. But in order that such sale would come within the ambit of inter-State trade or commerce, the movement of the goods must be the result of a covenant or an incident of the contract of sale. In this case, if the jute mills in West Bengal would have rejected the goods and would not have appropriated them to the contract, there would be no transfer of title and, consequently, no sale, as "sale" within the meaning of section 2(g) of the Central Sales Tax Act does not include a mere agreement to sell. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that their Lordships have not given due weight to section 4(1) being subject to section 3(a). Emphasis has been laid in the Madras case(3) on section 4(2)(b) as if it is independent of section 3(a). 11.. Mr. Mohanty also placed reliance on an unreported decision of the Supreme Court in Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes and AnotherSince reported in [1970] 26 S.T.C. 354 (S.C.). (Civil Appeals Nos. 2105 and 2106 of 1969 decided on 2nd March, 1970). This decision is distinguishable on facts. There the dispute related to the assessment made in respect of vehicles which moved from the manufacturing plant in Jamshedpur to the stock-yards in different States in the country. Sales tax had been duly paid in accordance with the respective State laws on the sales effected from the stock-yards there. The facts of that case were that the appellant did not maintain any stock-yard in the State of Bihar, but stock-yards were maintained in different States. This was done for the purpose of more effective distribution of the vehicles particularly among the network of dealers. These stock-yards were operated by the appellant's own personnel and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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