- (1.) The appellant is a company incorporated under the Indian Companies Act and carries on business of mining manganese ore and selling the same to various buyers in India, for the calender year, 1/01/1958 to 31/12/1958, the appellant was assessed to sales-tax under the C. P. and Berar Sales Tax Act, 1947 (since repealed by the Madhya Pradesh General Sales Tax Act, 1958). During the said period the appellant had sold manganese ore to eight different parties outside the State of Madhya Pradesh under written contract. It was contended on behalf of the appellant before the Sales-tax authorities that these contracts occasioned movement of the sold goods from the State of Madhya Pradesh to the State of Maharashtra so that all the sales were exempt from tax under the C. P. and Berar Sales Tax Act, 1947 and also under the Madhya Pradesh General Sales Tax Act, 1958 (Act No. 2 of 1959) which repealed the former. The Sales Tax Officer, Chhindwara rejected the contention of the appellant and assessed all the sales to tax by his order of assessment, dated 5/04/1960 on a taxable turnover of Rs. 2,22,918. 00 and odd. The appellant took the matter in appeal to the appellate Assistant Commissioner of Sales Tax but his appeal was dismissed. The appellant preferred a second appeal before the Board of Revenue, Madhya Pradesh. The Board of Revenue allowed the appeal holding that all the sales were exempt from tax under the C. P. and Berar Sales Tax Act, 1947. At the instance of the Commissioner of Sales Tax, Madhya Pradesh the Board of Revenue stated a case to the High court under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958 on the following question of law : "Whether on the facts and circumstances of the case the sales of manganese ore by the non-applicant were in the course of inter-State trade and therefore exempt from tax under the old Act or were intra-State sales in this State and therefore liable to tax under the old Act -by its judgment, dated 6/12/1967 the High court answered the question against the appellant holding that the sales in question were intrastate sales and liable to be taxed under the C. P. and Barar Sales Tax Act, 1947.
(2.) The Sales of manganese ore were affected during the period of 1/01/1958 to 31/12/1958. Before the commencement of this period Article 286 of the Constitution was amended on 11/09/1956 by the Constitution (Sixth Amendment) Act, 1956. By the Amendment the explanation to the first clause to Article 286 was omitted and for clauses (2) and (3) the following clauses were inserted : "(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). (3) Any law of State shall, in so far as it imposes, or authorises the imposition of a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. "by the Constitution (Sixth Amendment) Act, 1956, a new clause in Article 269 was added giving to Parliament the power to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce. In order to carry into effect the conferment of this power, the Constitution (Sixth Amendment) Act inserted a new entry 92-A in List I of Seventh Schedule and amended Entry 54 of the State List. In exercise of this power under Entry 92-A Parliament enacted the central Sales Tax Act, 1956 which came into force on the 5/01/1957. Section 3 of the central Sales Tax Act (Act No. 74 of 1956) provides as follows : "3.A sale or purchase of goods shall be deemed to take place in the cover 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. "
(3.) The interpretation of Section 3 (a) of the central Sales Tax Act was the subject-matter of consideration by this court in Tata Iron and Steel Co. , Ltd. v. S'. R. Sarkar and Co. and Shah, J. , speaking for the majority of the bench observed as follows : "In our view, therefore, within clause (b) of Section 3 are included sales in which property in the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto ; clause (a) of Section 3 covers sales, other than those included in clause {b) , in which the movement of goods from one State to another is the result of a covenant or incident of the contract of sales, and property in the goods passes in either State. "this observation of Mr. Justice Shah, was cited with approval by this court in Cement Marketing Co. v. State of Mysore and again in State Trading Corporation v. State of Mysore In the latter case Sarkar, J. , observed thus: "The question then is, did the sales occasion the movement of cement from another State into Mysore within the meaning of the definition In Tata Iron and Steel Co. Ltd. v. S. R. Sarkar (supra) it was held that a sale occasions the movement of goods from one State to another within Section 3 (a) of the central Sales Tax Act, when the movement 'is the result of a convenient or incident of the contract of sale'. That the cement concerned in the disputed sales was actually moved from another State into Mysore is not denied. The respondents only contend that the movement was not the result of covenant in or an incident of the contract of sale. ";