P. C. JAIN, J. - (1.) IN this writ petition, the petitioners have questioned the validity of rule 62-A (introduced by notification dated 31st October, 1986) of the Rajasthan Sales Tax Rules, 1955, framed under section 26 of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the State Act ). It raises a short question of law. IN order to arrive at a proper determination, it is necessary to consider this question in its proper perspective and, therefore, a broad constellation of facts, in which the question arises, may be briefly stated thus : Petitioner No. 1, Miss Alka Agarwal, is not a dealer under the provisions of the State Act. Petitioner No. 2 is M/s. Lohia Machines Ltd. , a private limited company, which is manufacturing scooters in the technical collaboration with the foreign firm, namely, Piaggio & CSPA of Italy. The scooters so manufactured are being sold under the brand names - LML Vespa XE, LML Vespa 150 and LML Vespa 150 NV. M/s. Sanghi Traders and INvestments Pvt. Ltd. is the authorised representative of petitioner No. 2, at Jaipur. Petitioner No. 2 is having its registered officer at C-3, Panki INdustrial Estate, Kanpur, in Uttar Pradesh. The factory of the petitioner for manufacturing of scooter is also at Panki INdustrial Estate, Kanpur in Uttar Pradesh. Petitioner No. 1 has placed an order for purchase of Vespa scooter with M/s. Lohia Machines Ltd. , Kanpur in 1983. It is the case of the petitioners that petitioner No. 2 announced a scheme for booking of scooters by the intending purchasers from the general public and by the debenture holders of the company, under which the intending purchasers were required to make an application/place an order for booking of scooters to the petitioner-company in a prescribed form along with payment of Rs. 500, by way of booking advance. The applications made by the intending purchasers were thereafter scrutinised and valid applications were accepted by petitioner No. 2. The contention of the petitioners is that thus a contract came into existence between petitioner No. 2 and petitioner No. 1 for purchasing a scooter. The company sells scooters directly from Kanpur to the individual customers who have placed their orders with the company. It is further stated by the petitioners that after acceptance of the booking by the company, a delivery card was sent by the company from Kanpur directly to the purchaser mentioning therein the booking/delivery No. , as allotted by the company to the individual customers whose orders were accepted by the company. It is also stated that this delivery No. was to be mentioned in all future correspondence between the petitioner-company and the customers concerned. As and when the turn of a customer matures for delivery of scooter, the petitioner-company informs the customer for making initial payment of a sum of Rs. 1,000 through a demand draft drawn in favour of the petitioner-company payable at Kanpur and to give the option of the said customer with regard to the colour to the scooter and the design and the model. The customer thereafter conveys to the petitioner-company his choice of colour and model and remits the initial payment of Rs. 1,000 to the petitioner-company, which is at Kanpur. It is thereafter that the company allots a particular scooter to the particular customer, by earmarking the same. Such allotment and earmarking are done at company's factory at Kanpur. The scooter allotted to a particular customer is identified and earmarked that particular customer with reference to engine No. and chassis No. and colour and only that particular scooter is to be delivered to that particular customer. All documents such as, excise gate pass, invoice, goods receipt, sale letters, etc. , are simultaneously prepared and sent from Kanpur in the name of the individual customer by specifying the scooter sold to the customer. IN all the relevant documents sent from Kanpur, engine No. , chassis No. , colour of the scooter and the name and address of the customer are specifically mentioned. The case of the petitioners is that the sales of scooters are thus made by the company directly to the customers and the movement of scooters from Kanpur to the customers in the State of Rajasthan was thus made as an inter-State sale which took place in the course of inter-State trade and commerce. It is further stated that the movement of scooter from Kanpur is, thus, in pursuance of the contract entered into between the petitioner-company and the customer and a particular scooter has to be delivered only to its allottee-customer and, thus such movement/sale is clearly covered under section 3 (a) of the Central Sales Tax Act (for short, the Central Act ).
(2.) THE Government of Rajasthan has issued a notification dated 31st October, 1986, under which the provisions of rule 62-A have been amended and it has made compulsory for any customer importing in the State of Rajasthan, the motor vehicles including scooter, etc. , the value of which exceeds Rs. 1,000, to produce a declaration in new form No ST-18 at the check post in the State of Rajasthan, failing which the scooter is liable to be seized in terms of section 22-A of the Rajasthan Sales Tax Act. Petitioner's challenge is that the provisions of rule 62-A are ultra vires as the requirement of furnishing of form No. ST-18 as per rule 62-A by a person receiving the goods for his personal use is beyond the provisions of section 22-A of the Act and is also beyond the State's power to make laws as covered by entry 54 of List II of the Seventh Schedule of the Constitution of India. The case of the State is that on the basis of the facts disclosed in the writ petition, no agreement between the company and the intending purchaser is made out for the sale of scooter. In fact, the State has denied that the company sells scooter directly from Kanpur to the customers who are said to have placed their orders with the company. It is further stated by the respondent that State Government is fully empowered to make provisions to prevent and check the evasion of State tax and, thus, the amendment made in the Rules and the form prescribed is well within the competence of the State Legislature. Section 26 of the Rajasthan Sales Tax Act fully empowers the State Government to frame rules and issue notifications to check and prevent evasion of State tax and, thus, the rule which requires the customers to obtain form No. ST-18 is perfectly legal and valid. There is, thus, controversy between the petitioners and the respondents. The controversy may be summarised in the following way : (a) Whether there is a contract of sale between petitioner No. 2 and petitioner No. 1 ? (b) Whether the sale results into inter-State sale which takes place in the course of inter-State trade and commerce ? (c) Whether the requirement of furnishing form No. ST-18 by a person receiving goods for his personal use in pursuance of the provisions of rule 62-A is beyond the scope of section 22-A of the Act and is also beyond the State's power to make laws, as conferred by entry 54 of List II of the Seventh Schedule of the Constitution of India ? These are the following documents on record : (a) Application for purchase of Vespa scooter. (b) Intimation of booking and delivery No. (c) Option letter-cum-pro forma invoice. (d) Option letter. (e) Despatch advice (f) Invoice. (g) Sales letter. (h) Gate pass for removal of excisable goods. (i) Carriers GR. On the basis of clauses (11) and (12), mentioned in the application form, for purchase of Vespa XE scooter, Shri Bapna, learned counsel for the respondents, submitted that simply because an application was moved for the purchase of scooter, it does not result into a contract of sale. The said clauses are as follows : " (11) Actual terms of sale, product specification, price, Government taxes, etc. , as ruling at the time of delivery will be applicable. (12) No contractual liability will be created as a result of Lohia Machines Ltd. accepting the advance against booking. " It is true that a contract cannot be said to have come into existence for the sale of scooter on the basis of the said application. But, in view of the various documents referred to above, there remains no doubt that there is a contract of sale for selling Vespa scooter, between petitioner No. 2 and petitioner No. 1. I may mention here that in the writ petition there is a generalisation of facts, but without entering into the generalisation as far as the present petitioners Nos. 1 and 2 are concerned, there is a contract of sale between the parties. In the sale letter, it has been mentioned that the vehicle described in it has been sold to the customer whose name is given by M/s. Lohia Machines Ltd. , Kanpur, in pursuance of the order of the customer placed with M/s. Lohia Machines Ltd. , Kanpur. In the sale letter, engine No. , chassis No. , colour, model, etc. , are given. In the despatch advice, there is a request for payment of the balance price through an account-payee demand draft in favour of M/s. Lohia Machines Ltd. payable at Kanpur. It also appears that the respondents were satisfied about the bona fide of transaction and after being satisfied form No. ST-18 was issued to petitioner No. 1. In this view of the matter, I am of the opinion that there is a contract of sale between petitioner No. 2 and petitioner No. 1. Coming to the second controversy between the parties, as referred to above, it would be necessary to notice the relevant provisions of the Central Sales Tax Act (No. 74 of 1956 ). Section 3 of the Central Act provides as follows : " 3. 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. " There are two explanations to the section, but they have no bearing on the case. Section 9 (1) of the Act provides as follows : " 9. Levy and collection of tax and penalties.- (1) The tax payable by any dealer under this Act on sales of goods effect by him in the course of inter-State trade or commerce, whether such sales fall within clause (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. " In the light of these provisions, what has to be considered is whether the sales effected by petitioner No. 2 occasioned the movement of goods from one State to another State, which on the facts of the instant case would be from the State of Uttar Pradesh to the State of Rajasthan. It is only if a sale occasions the movement of goods from one State to another that it can be deemed to have taken place in the course of inter-State trade or commerce within the meaning of section 3 (a) of the Act. It is true that in the instant case, the contract of sale clearly provided that the scooter could be moved from Kanpur to Jaipur. Section 3 (a) of the Central Act covers sales in which movement of goods from one State to another is the result of covenant or incident of contract of sale. The Honourable Supreme Court had the occasion to consider section 3 of the Central Act for determining as to when sale or purchase of goods can be said to take place in the course of inter-State trade or commerce. Reference may be made to : (a) Tata Iron and Steel Co. Ltd. , Bombay v. S. R. Sarkar [1960] 11 STC 655 (SC); (b) Cement Marketing Co. of India v. State of Mysore [1963] 14 STC 175 (SC); (c) State Trading Corporation of India v. State of Mysore [1963] 14 STC 188 (SC); (d) Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 STC 354 (SC); (e) Union of India v. K. G. Khosla and Co. [1979] 43 STC 457 (SC); (1979) 2 SCC 242. The said decisions clearly laid down that the only point to be kept in mind in determining the character of the transaction, whether it is inter-State trade or commerce, is to see whether the movement of goods has been occasioned by any contract of sale between the manufacture and the purchaser. The Supreme Court clearly pointed out tat if the movement of goods from one State to another is the result of covenant or an incident of contract of sale, then the sale is inter-State sale. In view of the clear proposition of law laid down by the Supreme Court, it is clear that in the instant case the sale is an inter-State sale.
(3.) THE next controversy that remains to be resolved is about the validity of rule 62-A of the Rajasthan Sales Tax Rules. Shri Jain, learned counsel for the petitioners, submitted that the provisions of the Rajasthan Sales Tax Act are applicable on the dealers carrying on the business in the State of Rajasthan in respect of any sale or purchase made by them in the State of Rajasthan and, if an inter-State sale is effected by any dealer from the State of Uttar Pradesh to a customer in Rajasthan, the State of Rajasthan has no jurisdiction, authority or right to impose any tax and the purchase by a customer of any commodity from an outside dealer in the course of inter-State trade and commerce is not covered by entry 54, List II of the Seventh Schedule of the Constitution. Shri Jain further submitted that the State Government has no right, authority or jurisdiction to restrict the use/consumption of a commodity which has been purchased by a customer. Shri Jain also urged that when the State has no power, the State Government as a delegated authority cannot have such power. Shri Jain also submitted that the provisions of rule 62-A and the requirement of furnishing of form No. ST-18 by a person receiving the goods for personal use are beyond the provisions of section 22-A of the Act and also beyond the State's powers to make laws as conferred by entry 54 of List II of the Seventh Schedule of the Constitution of India. Shri Jain further contended that the provisions of section 3 (a) of the Central Act have overriding effect on the provisions of the Rajasthan Sales Tax Act and, if the transaction is an inter-State sale, as in the present case, then the State of Rajasthan has no jurisdiction or authority to levy any tax. Section 26 of the Rajasthan Sales Tax Act does not authorise the State Government to make any rule or issue any notification thereunder by which the right of a citizen, who is not a dealer under the provisions of the Rajasthan Sales Tax Act, could be curtailed in any manner. On the other hand, Shri G. S. Bapna submitted that rule 62-A is perfectly valid. Section 26 of the Act fully empowers the State Government to frame rules and issue notification to check and prevent evasion of State tax. Shri Bapna's submission is that the provisions in rule 62-A have been made simply to check and prevent the evasion of the State Tax. His further submission is that by the said amendment no tax is being imposed in respect of inter-State sale made from any place outside the State. He urged that the requirement to obtain form No. ST-18 does not affect inter-State movement of goods. Shri Bapna's entire emphasis is that once it is held that the provisions have been made with a view to prevent and check evasion of tax, the same has to be taken within the competence of the State Legislature. I have given my thoughtful consideration to the submissions made by Shri Jain, learned counsel for the petitioners, and Shri Bapna, learned counsel for the State. There is no dispute between the parties that an entry in a legislative list must be read in its widest amplitude and, therefore, the legislature must be held to have power not only to legislate with respect to the subject-matter of the entry, but also to make ancillary or incidental provisions in aid of the main topic of the legislation. Reference may be made to Kasturi Lal Harlal v. State of U. P. [1987] 64 STC 1 (SC); (1984) 4 SCC 704, in which other Supreme Court judgments have been considered and now this question is no longer res integra. ;