Sabyasachi Mukharji, J. -
(1.) In this reference under Section 21(1) of the Bengal Finance (Sales Tax) Act, 1941, the following questions have been referred to this Court :
(1) Whether or not upon a true and proper construction of the relevant terms of the contract and in the admitted facts of the case, the inter-State movement of the components (valued at Rs. 4,27,200) was the result of a covenant or incident of the contract of sale ? (2) If, in the facts and circumstances of the case, the inter-State movement of the components from West Bengal to Kashmir constituted inter-State sale within the meaning of Section 3(a) of the Central Sales Tax Act, 1956 ? (3) If the sale should be deemed to take place inside Kashmir in view of what is contained in Section 4 of the Central Sales Tax Act, 1956 ? (4) If, in the event of any conflict between Sections 3 and 4 of the Central Sales Tax Act, 1956, the provisions of Section 3 should prevail ?
(2.) The assessee is a registered dealer and the relevant assessment period is the year ended 31st December, 1961. The Commercial Tax Officer, Radhabazar Charge, by his order dated 10th November, 1965, completed the assessment by including in the assessee's turnover his sales to Jammu and Kashmir Government amounting to Rs. 4,27,200 and charging the same to Central sales tax.
(3.) Being aggrieved the registered dealer preferred an appeal challenging the propriety of inclusion of the said sum of Rs. 4,27,200 in its turnover. The Assistant Commissioner, Commercial Taxes, Chowringhee Circle, by his order dated 5th October, 1967, confirmed the assessment. Being dissatisfied the registered dealer preferred a revision before the Commissioner of Commercial Taxes. The said revision was heard by an Additional Commissioner, who, by his order dated 25th January, 1972, partially modified the assessment. Being still dissatisfied the registered dealer went up in second revision before the Board of Revenue, West Bengal. The said revision was heard by the Additional Member, Board of Revenue, West Bengal, who, by his order dated 22nd January, 1974, dismissed the second revision. Being aggrieved by the said order of the Board of Revenue, the assessee had made an application under Section 21(1) of the Bengal Finance Sales Tax Act, 1941, read with Section 9(2) of the Central Sales Tax Act, 1956. Upon this the questions indicated above have been referred to us. It is an admitted position that under a contract the registered dealer was required to sell and supply dredgers in Kashmir and for the execution of the said contract the component parts of the dredgers were required to be taken to Kashmir from West Bengal, assembled there and thereafter delivery of the dredgers had to be given afloat in Kashmir. In order to appreciate the contention it is necessary to set out the contract. The contract contained, inter alia, the following : Furnish all labour, equipment, tools, supervision and inspection necessary to completely erect two (2) 12-inch Ellicott 'Dragon' model dredgers with floating and share discharge pipeline and pontoons, in accordance with drawings and specifications provided by Ellicott Machine Corporation. Hooghly to furnish all materials and equipment described on bill of material dated 4th August, 1960, as revised 3rd on October, 1960, which is attached hereto and made a part of this purchase order. Ellicott to furnish the remainder of the materials and equipment required. Painting : Each hull shall be given a base coat of zinc chromate primer inside and outside. A finish coat of red lead paint shall be applied to the inside of each hull and deck. The bottom and the sides outside each hull shall receive a coat of anti-corrosive brown paint before shipment. A sufficient supply of antifouling red paint shall be supplied to the customer to paint the bottoms and sides of the hulls just prior to launching. Frames, spuds and ladder shall have a base coat of zinc chromate primer and a final coat of Omaha orange enamel. All machinery shall be painted with machinery enamel in accordance with Ellicott's standard practice. Sufficient extra paints shall be shipped with the dredgers to touch up any places scraped in shipment. Delivery time : (1) The first dredger and half of the pipeline are to be delivered completely assembled and afloat at Sopure, Kashmir, by 21st April, 1961. (2) The second dredger and remainder of the pipeline are to be delivered completely assembled and afloat at Ladura, Kashmir, by 21st May, 1961. Deliveries subject to force majeure in accordance with annex 'B' of the order from the Jammu and Kashmir Government. You are to furnish us with five (5) copies of a detailed packing list for each shipment. Prices Unit price Total price Rs. Rs. (1) For two (2) dredgers complete, including assembly work at the sites in Kashmir 2,10,000 (2) All freight and insurance charges, including those relating to the machinery and other items supplied by Ellicott, from nloading at the dock area in Calcutta, and of the complete dredgers from your plant at Howrah to the sites in Kashmir (Rupees sixty-four thousand) 64,000 (3) For 800 feet of of floating discharge pontoon line and 1,200 feet of shore discharge pipeline (Rupees one lakh and twenty-two thousand) 1,22,000 (4) All freight and insurance charges for transportation of the pipeline from your plant at Howrah including assembly at the sites in Kashmir (Rupees thirty-one thousand two hundred) 31,200 Total price (Rupees four lakhs, twenty- seven thousand and two hundred) 4,27,200 These prices exclude import and customs duties on items furnished by Ellicott. Terms of payment : Thirty percent (30%) of the contract price (Rs. 1,28,160) with the order. Fifty percent (50%) of the contract price (Rs. 2,13,600) when the dredgers and pipelines are ready for shipment from your yard. Twenty percent (20%) of the contract price (Rs. 85,440) sixty (60) days after delivery afloat at the site. ;