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TMI Blog2009 (2) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the purchaser alone, which would not have any inter-State element. Therefore, there is no doubt left that the sale in the present case is inter-State sale within the meaning of section 3 of the CST Act. Thus, the first question of law is answered against the Revenue and in favour of the assessee. The answer to the second question would also be against the Revenue and in favour of the assessee because there is no evidence on record to prove a contract of appropriation between the company at Kanpur and the assessee, Dada Motors, who might have sold the goods at their premises at Jalandhar. None of those circumstances are present in the instant case nor there are any such findings available on record for us to conclude that the delivery of goods was given to the Dada Motors in pursuance to the contract of appropriation.Therefore, the third question is also answered against the Revenue and in favour of the assessee. - - - - - Dated:- 13-2-2009 - KUMAR M.M. AND BHALLA H.S. , JJ. The judgment of the court was delivered by M.M. KUMAR J. The instant reference under section 22(1) of the Punjab General Sales Tax Act, 1948 (for brevity, the Act ) has arisen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules ), the taxable quantum of a dealer who resides outside the State of Punjab but delivers goods for the purpose of consumption and sale in the State of Punjab is Rs. 5,000, which was not complied with. Accordingly, a notice under section 10(7) of the Act, for filing incorrect returns with the intention to evade tax, was served upon the authorised representative for appearance on November 30, 1984. In the reply filed by the company the stand taken was that the scooter is booked in pursuance to a direct contract entered into between the company and the customer on an advance payment of Rs. 500 and accordingly, the company dispatches the scooter directly to the customer with specification of engine number, chassis number and even the colour of the scooter opted by the customer. The explanation tendered by the authorised representative was not accepted particularly in view of the amendment of the Central Sales Tax Act, 1956 (for brevity, the CST Act ) which included in the expression dealer who carries on the business of buying, selling, supplying or distributing goods belonging to any principal whether disclosed or not. It was held that the assessee is a dealer with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our of the company at Kanpur. The Assessing Authority concluded that there was no element of interState transaction under section 3(a) of the CST Act. There is a regular showroom in the premises of the assessee, which is being utilised by the company for the purpose of displaying scooters and parts thereof. On scrutiny of documents, it was also found that scooter had moved from Kanpur to Jalandhar without any contract of sale and proceeded to trace the sequence of facts from the booking of the scooter up to final delivery to Shri Muni Lal, who is the purchaser. The assessee-Dada Motors was held to be an agent of the company within the meaning of section 182 of the Contract Act, 1872 (for brevity, the Contract Act ). In the process of reasoning, it was found that octroi and freight at the time of taking delivery was paid by the assessee, Dada Motors, and Shri Muni Lal, purchaserallottee, was nowhere near to make the payment at the spot. It led to the inference that the delivery of the scooter was taken by the assessee and freight/octroi was also paid by it. The scooter was also not straightway delivered to Shri Muni Lal but it was unloaded at the showroom of the assessee. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods said to take place in the course of inter-State trade or commerce. 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; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation 1. Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2. Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State. The aforesaid provision has been subject-matter of consideration of the honourable Supreme Court in various judgments. In the case of Bharat Heavy Electricals Limited v. Union of India [1996] 102 STC 373; [1996] 4 SCC 230 it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essential ingredient is that there must be a contract of sale. According to the findings recorded by the Tribunal there was correspondence with regard to purchase and sale of scooter between Shri Muni Lal of Jalandhar and the company at Kanpur. The correspondence can easily lead to an inference of implied contract of sale, especially when the price has been charged from Shri Muni Lal is ex-factory price at Kanpur and not ex-showroom price at Jalandhar. There is no role of Dada Motors, the assessee, because even the application has been made by Shri Muni Lal to the company at Kanpur and acknowledgement was sent by the company at Kanpur to Shri Muni Lal at Jalandhar. The second necessary essential ingredient is that the goods must actually move from one State to another in pursuance of such contract of sale, the sale being the proximate cause of movement. We find that even this characteristic stands fulfilled because the engine number and chassis number of the scooter was allocated to Shri Muni Lal and an intimation was sent to him stating that he was to pay freight and octroi. Therefore, it is evident that movement of goods is from Kanpur in the State of Uttar Pradesh to Jalandhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ship and were exported outside the country and could not be consumed before they reached the high sea. They asserted that the goods were sold in the territorial waters of India and not within the State of Tamil Nadu and as such the sales turnover in question was not exigible to sales tax under the Tamil Nadu General Sales Tax Act, 1959. The Madras High Court held against the assessee and the Supreme Court has upheld the decision of the Madras High Court by observing as under: (page 180) The short question, therefore, that arises in all these matters is whether sale of the goods in question took place within the territory of Tamil Nadu. In these cases sale took place by appropriation of goods. Such appropriation took place in the bonded warehouse. Such bonded warehouses were within the territory of the State of Tamil Nadu. Therefore, under sub-section (2), sub-clauses (a) and (b) of section 4 of the Central Sales Tax Act, 1956, the sale of goods in question shall be deemed to have taken place inside the State because the contract of sale of ascertained goods was made within the territory of Tamil Nadu and furthermore in case of unascertained goods appropriation had taken place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was not a case of export as there was no destination for the goods to a foreign country and the sale was for the purposes of consumption on board the ship. The sale did not take place on delivery on board the vessel. The honourable Supreme Court did not accord any significance to the fact that shipping bill was prepared for sending it for custom formalities with the object of effectively control smuggling activities. It also refused to accord any significance that delivery was to the captain on board the ship within the territorial waters. Another aspect necessary to be noticed is that the honourable Supreme Court reached the conclusion that there was no question of law taking place in the course of export or import under section 5 of the CST Act nor customs barrier set a terminal limit of the territorial sale for the purpose of sales tax and the sale beyond the customs barrier was still a sale within the State. It is in the aforementioned circumstances that the same significance was attached to the place of delivery of goods and none of those circumstances are present in the instant case nor there are any such findings available on record for us to conclude that the deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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