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TMI Blog1988 (4) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... (for short, "the Act, 1956") by the authorities below. Section 3 of the Act, 1956, so far as relevant, reads thus: "A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase,(a) occasions the movement of goods from one State to another; ...................." In Tata Iron and Steel Co. Ltd. v. S.R. Sarkar [1960] 11 STC 655, the Supreme Court took the view which has been consistently followed in a catena of authorities that the sale occasions the movement of goods from one State to another within section 3(a) of the Central Sales Tax Act when the movement is the result of a covenant or incident of the contract of sale. In Balabhagas Hulaschand v. State of Orissa [19761 37 STC 207, the Supreme Court held that the word "sale" appearing in section 2(g) defining sale as also in section 3(a) defining inter-State sale of the Act, 1956, includes an agreement to sell. Admittedly the assessee personally carried the items to the Rashtrapati Bhawan, New Delhi, which he agreed to sell under the agreement (annexure 3) to the President of India through the Secretary. What is to be seen is whether the movement of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree items to the Secretary to the President of India; the goods were to be supplied by the assessee conforming to the description of sample being retained by the Under Secretary (Co-ordination) in his office and that the goods were to be supplied within two months of the receipt of the order. There is no case of the assessee that no order was received from the Secretary to the President of India and no delivery was due thereunder; rather it is admitted that the assessee personally carried the goods to the Rashtrapati Bhawan. The very fact that the assessee carried the goods personally to the Secretary to the President of India goes to show that the movement of the goods had taken place pursuant to the agreement to sell. The hypothetical situation that since the goods were not dispatched either by rail or otherwise in the name of the buyer and, therefore, there was a possibility of being diverted them in Delhi to any other person, need not be considered to determine the question whether the movement of the goods was a result of a covenant or incident of a contract of sale. The facts that the assessee agreed to sell the items specified in the agreement at the agreed rate; that he ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t could be argued that the goods received from the manufacturer in India, could have been diverted by the assessee to any person other than the buyer, but on the facts of the case that the goods were got manufactured as per terms of the contract, the Supreme Court held that there was no possibility of the goods being diverted by the assessee for any other purpose. So the testing point is not the one whether the goods were dispatched from one State to another in the name of buyer, but what is decisive is whether the goods were manufactured or caused to be manufactured as per terms of the contract and whether the delivery of them was intended to be made to the buyer. When the goods are got prepared according to specification and taken to be delivered in the State where the buyer resides, then the reasonable inference that can be drawn is that the movement of the goods was the result of a covenant or incident of contract of sale. Though hypothetically, it could be argued that since the goods were not dispatched in the name of the buyer by rail or by any other carrier, there was possibility of their being diverted for some other purpose. But in view of the peculiar facts that the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n name and his agent in State Y receives the goods on behalf of A. Thereafter the goods are delivered to B in State Y and if B accepts them a sale takes place. It will be seen that in this case the movement of goods is neither in pursuance of the agreement to sell nor is the movement occasioned by the sale. The seller himself takes the goods to State Y and sells the goods there. This is, therefore, purely an internal sale which takes place in State Y and falls beyond the purview of section 3(a) of the Central Sales Tax Act not being an inter-State sale." Submission of Sri Bharatji Agarwal is that when the goods are booked by a dealer in his own name to another State and not in the name of the buyer, it cannot be said that the movement of the goods is in pursuance of the agreement to sell nor is the movement occasioned by the sale, because the seller himself takes the goods to other State and sells the goods there. The case of Balabhagas Hulaschand [1976] 37 STC 207 (SC) involved only two points for consideration, (i) whether the sale includes agreement to sell, and (ii) whether there could be sale in respect of unascertained and future goods. No doubt, the example No. II as given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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