PATHAK, J. - (1.) THE assessee manufactures and sells jute goods. Its selling agents, M/s. Bagla Bros., secured orders from local parties at Kanpur. The orders were placed in a printed form. The order forms were then sent to the assessee for necessary compliance. Subsequently the Kanpur parties sent instructions to the assessee to despatch goods pertaining to their orders to third parties outside Uttar Pradesh. Accordingly the assessee booked the goods by rail. The railway receipts showed the assessee both as consignor and consignee. In some case the receipts were sent to the Kanpur parties and in other cases to third parties outside Uttar Pradesh. C forms were also issued by the ex U.P. parties.
(2.) FOR the assessment year 1957-58 the assessee was assessed under the U.P. Sales Tax Act on a gross turnover of Rs. 43,93,303.00. This included the turnover of goods despatched outside the State in accordance with the procedure mentioned above. The assessee contended that the transactions in question represented inter-State sales and were not liable to U.P. sales tax, but the contention was rejected. An appeal by the assessee was dismissed. The order was affirmed by the Judge (Revisions) Sales Tax, who held that according to the terms set out in the contract forms the delivery of the goods was completed at the mill premises and the subsequent movement of the goods outside the State could not be said to have been occasioned by the contract of sale entered into by the assessee. At the instance of the assessee the Judge (Revisions) has referred the following question :- "Whether under the circumstances of the case, these transactions of subsequent despatch are to be regarded as intra-State sales having been completed at Kanpur or as inter-State transactions ?" It is appropriate at this stage to set out the relevant terms of the contract : "1. Unless otherwise expressly agreed in writing all goods sold shall be deemed to have been sold ex mill delivery. No complaint regarding quality or otherwise shall be entertained once the goods have left the mill premises. Even if the goods are despatched by the mills in response to the desire of the buyer, the liability of the buyer shall not cease under this condition. 2. If the buyers refuses or neglects to take delivery of the goods sold under the contract on any account whatsoever, the goods may be disposed of on the buyer's account, risk and responsibility without any notice being given for the resale by the mills and the buyer shall be liable for the resulting loss. Even if the mills do not actually resell the goods, they can claim from the buyer damages based on the difference between the contract price and the market price. 3. The date of delivery stated in the order or contract shall not be the essence of the contract. The mill shall not be responsible for delay in performance of this contract partly or wholly due to strike, fire, damage or accident to the mill or their machinery or booking restrictions or any other even or circumstances whatsoever beyond the control of the mill. 4. If under the unforeseen circumstances, the mill does not work for three months in continuation, the mill has full right to cancel part or whole of the contract. 5. Once the goods have left mill premises, no liability whatsoever will be attached to the mill thereafter for any damage caused or done to the goods."
(3.) THE case of the assessee is that the sale was effected by the assessee to an ex U.P. party and that the contract of sale evidenced by the contract form was a mere agreement of sale and did not mature into a completed sale between the assessee and the Kanpur party. The basis of that submission is the circumstance that the railway receipts in respect of the goods were drawn in favour of the assessee as consignee, and the argument is that there-by the assessee retained the property in the goods until the property passed upon endorsement of the railway receipt in favour of the ex U.P. party on payment of price of the goods. The assessee says that the case falls under section 3(b) of the Central Sales Tax Act. Alternatively, it is urged that the instructions given by the Kanpur party to despatch the goods outside U.P. must be considered as part of the contract of sale and, therefore, the movement of the goods from Kanpur to a place outside U.P. was occasioned by the contract of sale, and the case would then fall under section 3(a) of the Act. The case of the Commissioner of Sales tax, on the other hand, is that under paragraph 1 of the contract of sale, property in the goods passed at the mill gate, and the subsequent despatch of the goods by rail by the assessee was merely in order to accommodate the buyer. It is contented that the circumstance that the railway receipt disclosed the assessee as consignee does not militate against this position. In that event, neither clause (a) nor clause (b) of section 3 of the Act is attracted. Section 3, Central Sales Tax Act, reads : "When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce. - 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 time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2. - Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State." ;