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TMI Blog1976 (5) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... comes within the ambit and scope of article 286(1)(b) of the Constitution of India read with section 5 of the Central Sales Tax Act? " References made at the instance of the assessee have been registered as S.J.C. Nos. 85 to 89 of 1971, while those made at the instance of the revenue have been registered as S.J.C. Nos. 90 to 94 of 1971. These references came up for hearing before a Division Bench consisting of two of us and by order dated 6th February, 1976, these were asked to be placed before a larger Bench to examine the correctness of the several contentions raised and that is how these references are now being disposed of by us. 2.. The assessee, the Minerals and Metals Trading Corporation of India Limited, is a public sector company of the Union Government and is a registered dealer under the Act within Cuttack III Circle. During the years 1966-67 and 1967-68 and the quarters ending June, September and December, 1968, the assessee purchased certain mineral ores from mine-owners, who are registered dealers under the Act upon furnishing declarations in terms of rule 27(2) of the Orissa Sales Tax Rules (hereinafter referred to as the "Rules") undertaking to resell the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals, therefore, was that while the assessee's liability was found not to arise on account of violation of the undertaking in the declarations, the assessee's sales in favour of the Japanese buyers were found liable to tax. As the accounts had to be reverified for ascertaining the correct figures, the Tribunal directed remand of the matters. Against this order both the revenue as also the assessee felt aggrieved-the assessee so far as its claim of total exemption was rejected by holding that there was a sale at Paradeep in favour of the foreign buyer which was exigible to Orissa sales tax and the revenue so far as there was a finding that resale took place at Paradeep and, therefore, there was no application of the proviso on the basis of violation of the declarations. 6.. There is no dispute that the assessee purchased mineral ores from the mine-owners, who are registered dealers under the Act and, upon furnishing declarations as provided under rule 27(2), the assessee had not paid sales tax on these purchases. The declarations given by the assessee obliged it to effect resales within the State of the commodity so purchased. Section 5(2)(A) defines the expression "taxable tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plated activity being over. Under article 14, in the event of loss of cargo, in part or in full, the result of the loading port analysis is deemed to be final. Article 16 obliges the buyer to arrangement of ships for transport. Provision has also been made for payment by irrevocable, transferable, assignable, divisible and confirmed without recourse to drawer letters of credit to cover 100 per cent value of each shipment. On the basis of these clauses, which reflect the true intention of the contracting parties, it is claimed that the title in the ores passed at Paradeep and thus there were local sales within the State, The learned Advocate-General appearing on behalf of the State contended that the goods were finally appropriated in the Japanese ports and, therefore, there could be no sale within the State of Orissa. On the terms of the contract indicated above, we do not think, the Tribunal can be said to have been wrong in holding that sales took place at Paradeep. In paragraph 9 of its decision, the Tribunal summarised its finding on the point thus: "The appellant has furnished copies of certain contracts, viz., No. 11 62/Jap., No. 1/67/Jap., contract No. 8/65 and contract of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jection clause at the other end. From this there is no escape from the conclusion that sales have been effected at Port Paradeep. Consequently, it cannot be said that there has been any violation of the declaration furnished by the M.M.T.C., viz., to resell the goods in Orissa." We concur with the finding of the learned Tribunal that the assessee effected resales at Paradeep within the State of Orissa. As pointed out by the Supreme Court in the case of State of Madras v. Gannon Dunkerley Co.[1958] 9 S.T.C. 353 (S.C.). , in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, which presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale. On an analysis of the contract, as indicated above, it is clear that both the parties had capacity to contract; the assessee had title to the goods and title in the property has passed to the Japanese buyers for good consideration. Once these ingredients are satisfied, a sale takes place. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale or purchase which occasions the export. The Coffee Board case[1970] 25 S.T.C. 528 (S.C.); [1970] 3S.C.R. 147; A.I.R. 1971 S.C. 870. as well as the case of Binani Bros.(2) clearly indicates that the distinction between sales for export and sales in the course of export is never to be lost sight of. The features which point with unerring accuracy to the contract between the appellant and the corporation on the one hand and the contract between the corporation and the foreign buyer on the other as two separate and independent contracts of sale within the ruling in the Coffee Board case[1970] 25 S.T.C. 528 (S.C.); [1970] 3S.C.R. 147; A.I.R. 1971 S.C. 870. and the Binani Bros. case[1974] 33 S.T.C. 254 (S.C.); (1974) 1 S.C.C. 459; A.I.R. 1974 S.C. 1510. are these: The corporation entered on the scene and entered into a direct contract with the foreign buyer to export the goods. The corporation alone agreed to sell the goods to the foreign buyer. The corporation was the exporter of the goods. There was no privity of contract between the appellant and the foreign buyer. The privity of contract is between the corporation and the foreign buyer. The immediate cause of the moveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate sale, the same is not exigible to Orissa sales tax being in the course of export. There is no doubt that if the restriction imposed under the Constitution did not operate, the sales would have been subjected to tax. 10.. Examining the very aspect that is now for consideration, a Bench of this Court consisting of two of us in the case of State of Orissa v. Joharimal Gajananda[1976] 37 S.T.C. 157., has said: "......Its declarations contemplated that it would resell the goods so purchased in Orissa. As we have already found, the goods purchased by the assessee were as a fact resold in Orissa, but these sales, by application of the provisions of the Central Act, became the first sales under the Central Act. It is true 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote the same: "Section 2. Definitions.-In this Act, unless there is anything repugnant in the subject or context............ (g) '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, but does not include a mortgage, hypothecation, charge or pledge and the words 'buy' and 'purchase' shall be construed accordingly: Explanation.-(a) A sale or purchase of goods shall be deemed to take place inside the State if the goods are within the State- (i) in the case of specific or ascertained goods at the time the contract of sale is made; and (ii) 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........... " According to the learned Advocate-General, the contracts in these cases were for "unascertained or future goods at the time the contracts of sale were made". Therefore, clause (i) of the explanation has no application and clause (ii) does not apply, it is submitted, because there is no appropriation. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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