Decided on December 09,1952

STATE OF BIHAR Respondents


Ramaswami, J. - (1.) In this case the petitioner has obtained a rule calling upon the State of Bihar and the other respondents to show cause why a writ in the nature of prohibition should not be issued restraining them from levying or realising tax on sale and purchase of coal outside the State of Bihar.
(2.) The petitioner is Diamond Coal Company, Limited, which is a joint stock company having its registered office at Jharia in the district of Manbhum. The petitioner carries on trade in coal in the various States of India. During the year 1949-50 the petitioner's gross turnover on sale of coal was estimated to be a sum of Rs. 6,11,717/2/9. After allowing for sales to registered dealers and a rebate of 2 per cent, the taxable turnover was determined by the Sales tax authorities to be Rs. 5,98,467. The petitioner claimed that he had sold coal outside Bihar to the value of Rs. 55,862/3/6. The petitioner demanded that this amount should, be exempted from sale tax. On 30-10-1351 the Assistant Superintendent of Sales Tax rejected the claim holding that the petitioner was liable to pay tax even on the quantity of coal sold outside Bihar. The petitioner alleges that he was illegally made liable to pay sale tax of Rs. 790/1/- in excess of what he is really liable to pay.
(3.) In support of the rule, Mr. Basant Chandra Ghosh referred to Section 2(g), Bihar Sales Tax Act, 1947. Section 2(g) defines "Sale" as follows: "'Sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goads involved in the execution of contract but does not include a mortage, hypothecation, charge or pledge: Provided that a transfer of goods on hire-purchase or other instalment system of payment shall, notwithstanding the fact that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale: Provided further that notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in Section 4 of that Act, is made, shall, wherever the said contract of sale is made be deemed for the purposes of this Act to have taken place in Bihar." The Act was amended by Bihar Act 7 of 1951 and as a result the second proviso to Clause (g) of Section 2 was omitted and to the said clause as so amended, the following explanation was added : "Explanation: The sale of any goods actually delivered in Bihar as a direct result of such sale for the purpose of consumption in Bihar shall be deemed for the purpose of this Act to have taken place in Bihar, notwithstanding the fact that under the general law relating to sale of goods, the property in the goods has by reason of such sale, passed in another State.";

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