A. C. Gupta, J. - (1.) The appellant in Civil Appeal No. 928 of 1975, M/s. Karam Chand Thapar and Brothers, is a limited company incorporated under the Companies Act, (referred to hereinafter as the Company), and the six branches of the Company at Allahabad, Moradabad, Kanpur, Varanasi, Gorakhpur and Lucknow are the appellants in Civil Appeal No. 929 of 1975. The Company carries on business as coal agents and is registered under the Uttar Pradesh Sales Tax Act, 1948 and the Central Sales Tax Act, 1956 with the Sales Tax Officer at Moradabad in Utter Pradesh. We shall refer to these two statutes as the U. P. Act and the Central Act for the sake of brevity. The Company used to arrange supply of coal from colleries situate in West Bengal and Bihar to consumers in Uttar Pradesh. The collieries used to sent the coal by rail and the railway receipts wer prepared either in the name of the Company or in the name of the consumer in Utter Pradesh on whose behalf the order for supply of coal was placed. The collieries sent the bills and invoices in respect of the coal despatched to Uttar Pradesh to the Company's head office in Calcutta; the Company forwarded the railway receipts to the consumers in cases where the receipts were in the names of the consumers and endorsed the receipts that were in the Company's name in favour of the consumers for whom the coal had been despatched. These two appeals, brought on certificates of fitness granted by the Allahabad High Court, arise out of two writ petitions filed in the High Court respectively by the Company and its aforesaid branches. The petition filed by the company, leading to Civil Appeal 928, is directed against an order made under Section 22 of the U. P. Act giving rise to the question whether Section 9(1) of the Central Act was applicable to the case enabling the State of Uttar Pradesh to levy and collect Central Sales Tax in respect of subsequent sales of coal effected by the Company to consumers in Uttar Pradesh by endorsement of the documents of title, in the other writ petition, filed by Company's six branches, the applicability of Section 9(1) of the Central Act was one of the points raised in the High Court, but this was the only point urged before us in Civil Appeal No. 929. The assessment year in question in Civil Appeal 928 is 1966-67, and that in Civil Appeal 929 is 1969-70. As the Company's appeal covers the question involved in the other case and raises two additional questions, we shall state only the facts of Civil Appeal 928 to indicate how these questions arise.
(2.) In the assessment year 1966-67, the Company filed quarterly returns showing its turnover of coal in two categories: (a) turnover in cases where the railway receipts had been prepared in the names of the consumers amounting to Rs. 30,07,439/02 p., and (b) turnover in cases where the railway receipts had been prepared in the name of the Company but subsequently endorsed in favour of the consumers in Uttar Pradesh amounting to Rs. 5,59,172/32p. The dispute in this case relates to the amount of Rs. 5,59,172/32p. which according to the Company could not be taxed in the State of Uttar Pradesh. Before we proceed further, it would be convenient to set out the relevant provisions of the two Acts. Taking the Central Act first, Sec. 2 (c) defines "declared goods" as the goods declared under Section 14 to be of special importance in inter-State trade or commerce. Section 14 which declares certain goods to be of special importance in inter-State trade or commerce mentions coal as one of them. Under Section 3 a sale or purchase of goods is 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 documentsof title to the goods during their movement from one State to another. The sales we are concerned with in this case were of this second type. Sub-section (1) of Section 6 provides that subject to the other provisions of the Act, every dealer shall be liable to pay tax under this Act on sales of goods effected by him in the course of inter-State trade or commerce. Sub-section (2) of Section 6 states that notwithstanding what is provided in sub-section (1), any subsequent sale of goods effected by a transfer of documents of title to the goods.- (A) to the Government, or (B) to a registered dealer other than the Government, if the goods are of the description referred to in sub-section (3) of Section 8, shall be exempt from tax under this Act. There are two provisos to this sub-section, but it is not necessary to refer to them. Section 7 (1) requires every dealer liable to pay tax under this Act to apply for registration. Sub-section (3) of Section 7 provides that if the application is in order, the prescribed authority shall register the applicant and grantto him a certificate of registration in the prescribed form which shall specify the class or classes of goods for the purpose ofsub-section (1) of Section 8, Rule 3of the Central Sales Tax (Registration and Turnover) Rules, 1957, states that an application for registration under Section 7 shall be made in Form A, and Form A requires the purpose or purposes for which the goods or classes of goods are purchased by the dealer in the course of inter-State trade or commerce to be specified as would appear from the Form, 're-sale' is one such purpose. Rule 5(1) of the Rules provides that the certificate of registration must be in Form B Section 8 (1) provides that every dealer who in the course of inter-State trade or commerce, (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3) of this section, shall be liable to pay tax under this Act at the rate of three per cent of his trnover. Sub-section (2) of Sec. 8 states that the tax payable by any dealer on his turnover relating to the sale of goods in the course of inter-State trade or commerce which does not fall within sub-section (1) shall be - (a) in the case of declared goods at the rate applicable to the rate applicable to the sale or purchase of such goods inside the appropriate State, and (b) in the case of goods other than declared goods, at the rate of tenper cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. The goods referred to in clause (b) of sub-section (1) are specified in sub-section (3) of this section as goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him. Sub-section (4) of Section 8 says that the "provisions of sub-section (1) shall not apply to anysale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner -(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority", Rule 12(1) of the Rules states inter alia that the declaration referred to in sub-sec. (4) of Section 8 shall be in Form C. Clause (b) of sub-section (4) is not relevant to the present purpose. Section 9(1) reads: "9. (1) Levy and collection of tax and penalties. The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within cl. (a) or clause (b) of Section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub-section (2) of S.6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) ofSection 8 in connection with the purchase of such goods."
(3.) The dispute in this case turns on whether the proviso to Section 9(1) is applicable to the case. Reference may also be made to Section 15 which provides the restrictions and conditions in regard to the tax on sale or purchase of declared goods within a State. The tax on sale or purchase of such goods inside the State is not to exceed three per cent of the price thereof, and such tax is not to be levied at more than one stage.;