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TMI Blog1981 (2) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Mills (the assessee), manufacturers of vanaspati, sold certain quantities of vanaspati ghee to the State of Jammu and Kashmir and to the office of Special Police Establishment, Indo-Tibetan Border, Simla. The case of Delhi Cloth Mills was that these were sales in the course of inter-State trade or commerce and would not be liable to be taxed under the local Act. The authorities, however, rejected this plea. On appeal to the Tribunal, it agreed that the authorities below had correctly held that the sales were not inter-State sales. On a reference being sought by Delhi Cloth Mills, the abovesaid question of law has been referred to this Court. These are two references for the assessment years 1966-67 and 1967-68 and will be disposed of by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be in the course of inter-State trade and commerce merely because the property had passed in Delhi. Mr. Chawla is no doubt right in his contention. In order that a sale may be regarded as inter-State sale, it is immaterial whether the property in the goods passes in one State or another: see Union of India v. K.G. Khosla Co. Ltd.[1979] 43 S.T.C. 457 (S.C.); A.I.R. 1979 S.C. 1160. So the mere fact that property may have passed in Delhi will not determine the question. But it is not correct to say that the Tribunal has gone only into that aspect. The Tribunal has applied the tests laid down in Balabhagas Hulaschand v. State of Orissa[1976] 37 S.T.C. 207 (S.C.). and then arrived at its conclusion. The tests laid down by the said authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being detained, vide letter of 20th June, 1966. It is also not disputed that the sale note was made in the name of the Trade Commissioner, Jammu and Kashmir, Delhi, though destination was mentioned as Jammu. Now, nowhere from this correspondence can we find any stipulation regarding the movement of goods, an essential condition to be in the course of inter-State trade or commerce. The suggestion of Mr. Chawla is that here undoubtedly the buyer was the State of Jammu and Kashmir which was outside Delhi. The form D which is equivalent to form C so far as the Government is concerned and which is meant to be given for inter-State sales was given by the Jammu and Kashmir Government. The parties understood it to be an inter-State sale because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt the goods sold by the applicant may have gone to Jammu and Kashmir but what is material to emphasise is that this movement of goods from Delhi to Jammu and Kashmir was not as a result of any stipulation in the contract of sale between the applicant and the State of Jammu and Kashmir. The mere fact that the Jammu and Kashmir Government purchased the goods and then transported them to Jammu and Kashmir does not mean that there was an agreement between the parties that they would be so taken out of Delhi. If, for whatever reason, after having paid the price and taken the delivery of goods from the applicant, the Jammu and Kashmir Government had not carried the goods to Jammu they would then have been committing no breach of contract with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility which the applicant was undertaking by means of its letter of 7th May, 1966, was to supply the particular quantity and to give the delivery in Delhi. As a matter of fact, if any contract is to be spelt out, the maximum that the applicant could be made liable was to supply the said quantity to the Trade Commissioner at Delhi. The Jammu and Kashmir Government could not have compelled the applicant to supply the goods in Jammu and Kashmir. It is evident, therefore, that the movement of goods from Delhi to Jammu and Kashmir was not occasioned by any contract or as an incident to the contract. The Tribunal's finding cannot, therefore, be faulted. Regarding the supply to the Special Police Establishment, Simla, the applicant is in a worse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they were in the course of inter-State trade or commerce. Of course the certificate by the governmental agencies cannot make the sales inter-State if in law they are not as we have found. We may in this connection mention that the applicants apparently acting on the certificate by the governmental agencies have presumably not collected the sales tax on these sales treating them as being exempt from the gross turnover. If, however, the applicants are made liable to pay any sales tax on these sales on account of their being not treated as inter-State sales we have no doubt that the governmental agencies which would in the first course have paid the tax would consider the desirability to reimburse this amount which in any case was their li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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