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TMI Blog2005 (2) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... y are not liable to pay the sales tax under the State Act, but are liable to pay tax only under the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Act "). All the appellants are said to be traders in sandalwood and having sale outlets in other States than Kerala, be it in Uttar Pradesh, Delhi or Haryana and had participated in the sandalwood auction conducted by the Kerala Forest Department in which they were the highest bidders. They were not permitted to take their bid properties unless the sales tax under State Act is remitted. Their contention is that they participated in the auction not to sell the sandalwood timber within the State of Kerala and their sole intention was to transport sandalwood to the respective d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited a Constitutional Bench decision of the Supreme Court in Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. State of Kerala [1965] 16 STC 467, which held that sale of goods in auctions is complete by the fall of the hammer under the Sale of Goods Act. In the said case, the question was whether the sale was completed within the area of Fort Cochin, which was hitherto in the State of Madras or Willington Island which was in the State of Travancore. Dealing with the question very comprehensively, it was ruled by the Supreme Court authoritatively that since the sale took place within the territorial jurisdiction of Fort Cochin, tax which is leviable by the State of Madras was payable. Learned counsel for the appellants seek to distinguish the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in Kerala. Because of the paucity of supply of sugar cane from the areas within Kerala, the above sugar factory pleaded with the Kerala Government seeking permission to purchase from adjoining areas in Tamil Nadu. The Kerala Government responded and addressed to Tamil Nadu Government to which the latter had responded and, consequently, issued a Governmental order permitting such sale. In the Government Order issued, there is a clause that, sales tax as levied under the Tamil Nadu General Sales Tax Act, should be paid by the above factory. But, later on, the above sugar factory resiled from the promise of paying sales tax after the sale transaction was completed which led to a dispute. The Madras High Court ruled in favour of Tamil Nadu G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Andhra Pradesh had filed appeals before the Supreme Court, but, the Supreme Court upheld the judgment of the High Court on the ground that sale of electricity was inter-State and fell outside the purview of the Andhra Pradesh General Sales Tax Act. It was held by the Supreme Court that no State legislation, nor any stipulation in any contract, can fix the situs of sale within the State or artificially define the completion of sale in such a way as to convert an inter-State sale into an intra-State sale or create a territorial nexus to tax an inter-State sale unless permitted by an appropriate Central legislation. 5.. The above three decisions relied upon by the learned counsel for the appellants lay down a legal principle that there s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, in fact, it would be forfeited to the Government, in case of default by the successful bidders to comply the conditions of auction. After the auction, the successful bidder shall affix his signature in the auction register so that he shall not go back from the auction terms and that indicates that the sale is complete in so far as the auction purchaser is concerned. Confirmation is the discretion of the officer, subject to the terms of the auction and upon confirmation of sale of the lots, the successful bidder has to remit the full amount and sales tax in the office of the Forest Department and then transit permits will be issued to whatever destination the auction purchaser seeks for. Thus, it is clear that auction conditions do not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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