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TMI Blog2015 (7) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... e to another. - A movement of goods which takes place independently of a contract of sale would not fall within the ambit of the above clause (a) of Section 3 of the Act Clause 3 of the approval specifically provides that if the timber is not removed by the auction purchaser within the specified time or within a further period of 15 days on payment of late fees then the amount deposited by the purchaser shall be forfeited and the Forest Corporation shall also become the owner of the timber of the lots, kept in the depot. This indicates that the delivery to the petitioner of the timber auctioned was complete at the depot of the Forest Corporation on payment of the agreed amount of consideration. - auction by the forest corporation is an intrastate sale and not inter-state sale - Decided against assessee. - Writ Tax No. - 1057 of 2011 - - - Dated:- 27-7-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Kesarwani,JJ. For the Petitioner : Ashok Kumar, Praveen Kumar For the Respondent : C. S. C.,Balwant Singh,S. Shekhar ORDER (Delivered by Hon'ble Surya Prakash Kesarwani, J) 1. Heard Sri Praveen Kumar, learned counsel for the petitioner an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided by the fact finding authorities under the Act on appreciation of evidence and the contract of sale. Such questions cannot be adjudicated in writ petition under Article 226 of the Constitution of India and as such the writ petition itself was not maintainable. The impugned circular does not suffer from any infirmity, inasmuch as it merely reiterates the principles of law as laid down by Hon'ble Supreme Court in various judgments that the sale by auction is complete on acceptance of bid. He drew the attention of this Court to the provisions of Section 64 of the Sales of Goods Act, the provisions of Section 3 of the Central Sales Tax Act and the law laid down by Hon'ble Supreme Court in the case of Union of India and another Vs. M/s K.G. Khosla Company Ltd. and others, (1979) 2 SCC 242, Kelvinator of India Ltd. Vs. The State of Haryana, (1973) 2 SCC 551, Hyderabad Engineering Industries Vs. State of Andhra Pradesh, 2011 NTN (45) 141, Commissioner of Commercial Taxes, Hyderabad Vs. Desai Beedi Company, Andhra Pradesh, 2015 NTN (Vol.58)-53 and the Division Bench judgment of this Court in M/s Mohan Steels Ltd. and another Versus Commissioner of Trade Tax and another and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which should be decided as a question of fact initially by a fact finding Tribunal. Thus, the question that auction sale effected by the U.P. Forest Corporation was inter-state sale or intra-state sale are basically questions of fact which cannot be adjudicated in writ jurisdiction under Article 226 of the Constitution of India, particularly, when neither a copy of the tender notice nor the conditions of tender for auction sale of timber are available on record. 10. Section 3 of the Central Sales Tax Act, deals with the circumstances when the sale or purchase of goods can be said to take place in the course of inter-state trade or commerce which reads as follows : - Section-3. - 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 tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd means to cause or to be the immediate cause of . A transaction of sale becomes subject to tax on completion of sale. For a sale to be exigible to tax under the Act, it must be shown to have occasioned the movement of goods from one State to another and the movement must be the result of a covenant or incident of the contract of sale. Thus, the sale of goods is in the course of inter-State Trade if the sale and movement of goods from one State to another are integral part of the same transaction. There must exist a direct nexus between the sale and movement of goods from one State to another. 14. A movement of goods which takes place independently of a contract of sale would not fall within the ambit of the above clause (a) of Section 3 of the Act. In the case of Kelvinator of India Ltd. (supra) Hon'ble Supreme Court held in para 10 as under : - It is also plain from the language of section 3 (a) of the Act that the movement of goods from one State to another must be under the contract of sale. A movement of goods which takes place independently of a contract of sale would not fall within the ambit of the above clause. Perusal of section 3(a) further makes it manifest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the contract of sale so provides (page 407). The view of the majority was approved by this Court in the Cement Marketing Co. of India (P) Ltd. Vs State of Mysore, (1963)3 SCR 777, State Trading Corporation of India v. State of Mysore, (1963) 3 SCR 792 and Singareni Collieries Co. Vs. State of Andhra Pradesh, (1966)2SCR 190, in K. G. Khosla Co. v. Deputy Commissioner of Commercial Taxes, (1966) 3 SCR 352, counsel for the Revenue invited the Court to reconsider the question but the Court declined to do so. In a recent decision of this Court in Oil India Ltd. v. The Superintendent of Taxes others, (1975) 3SCR 797, it was observed by Mathew, J., who spoke for the Court, that: (1) a sale which occasions movement of goods from one State to another is a sale in the course of inter-State trade, no matter in which State the property in the goods passes; (2) it is not necessary that the sale must precede the inter-State movement in order that the sale may be deemed to have occasioned such movement; and (3) it is also not necessary for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding inter-State Movement must be speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomary manner by the auctioneer. It would also be correct to say that if the auction sale of chattels is unconditional and is in respect of specific ascertained goods and nothing remains to be done to the goods for putting them in a condition ready for delivery, the property in the goods would pass to the purchaser upon the acceptance of the bid but that would not be because of Section 64(2) but because of Section 20 and such would not be the case if the goods sold thereat are non-specific or unascertained goods or the auction sale is conditional. In this context it will be useful to refer to a decision of this Court in A.V. Thomas Co. Ltd. v. Deputy Commissioner of Agricultural Income Tax, AIR 1964 SC 569 where this Court recognised a distinction between auction sales pertaining to specific or identifiable goods and auction sales in regard to unascertained goods and held that in regard to the former the property in the goods passed when the contract was accepted at the fall of hammer and not in the latter case. That was a case where the teas were stored in the godowns in the Willingdon Island which was in the State of Travancore Cochin and samples of those teas were taken to Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have taken place outside the State of Travancore Cochin and of portions of lots inside that State. Approving the distinction this Court ultimately held that the sales of 'full lots' being outside sales were not liable to the levy of sales tax. Thus Section 64(2) has nothing to do with the aspect of the passing of the property at an auction sale and it is by virtue of goods being specific and in a deliverable state that under Section 20 the property in such goods passes to the buyer at the completion of the contract at the fall of hammer at such sale. 19. In a recent judgment of Hon'ble Supreme Court in the case of Commissioner of Commercial Taxes, Hyderabad Vs. Desai Beedi Company, Andhra Pradesh considered the provision of Section 3(a) of the Act with respect to auction sale of Beedi leaves and held it to be not an inter-state sale, as under: - 30. The tender schedule, as issued by the seller, also stipulates that the purchaser should remove the stocks from the godowns within 30 days of issue of delivery orders failing which the purchaser will have to pay the godown rent and other expenses on watch and ward, insurance etc. Further, the period for which t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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