- (1.) BY an order dated 28-3-62 passed by the Assistant Commissioner, Excise & Taxation, Banswara, the applicant was assessed to tax under the Central Sales Tax Act for the period 1-4-57 to 23 10-57. Liability for Central Tax was determined as being from 1st July, 1957 and tax amounting to Rs. 713. 59 was assessed. A penalty of Rs. 151/- was also imposed. The assessee appealed to the Deputy Commissioner (Appeals) against the order by two separate appeals one for the tax-and another for the penalty.
(2.) THE main contention of the assessee in regard to the assessment of tax was that the sale was not in the course of inter-State trade and commerce, but outside State of Rajasthan, and hence could not be taxed by the Rajasthan State even under the Central Sales Tax Act. THE Deputy Commissioner (Appeals) after examining the terms of the agreement and considering the nature of the transactions in the light of the agreement and the enunciation of law by the Supreme Court in the case of Tata Iron & Steel Co. (1960 STC 665) held that the sale in question was sale in the course of inter State trade and commerce, and that the movement of the goods incident to the sale being from Rajasthan, tax under the Central Sales Tax Act was chargeable in Rajasthan. The assessee came in revision to the Board, raising the same point in regard to the nature of the sale. The matter came up before a Division Bench consisting of learned Members Shri S. L. Kakkar and Shri Gajendra Singh. Learned Member Shri S. L. Kakkar came to the following conclusion: "the sale took place in the course of inter-State trade or commerce the moment the movement was considered, and therefore, the appropriate State competent to tax the applicant was the State of Rajasthan wherefrom goods were moved. " Learned Member Shri Gajendra Singh, however, differed. His conclusion was as follows: - ''no property in the goods passed at the commencement of the journey within the Rajasthan State so as to bring the transaction within the definition of an inter-State sale. In view of this fact there was no inter-State sale. . . . . . . . . . . . the petitioners were clearly not taxable. " In view of this difference of opinion, the matter has come up before me. The learned counsel for the assessee as well as the departmental representative both agreed that the outcome of the dispute regarding the nature of the sale, whether it was in the course of inter State trade or not would depend on the interpretation of the facts in the light of the agreement and the principles enunciated by their Lordships of the Supreme Court in the Tata Iron & Steel Go case (1960 STC 665 ). While the departmental representative repeated the arguments taken in the decision of the appellate authority and the judgment written by the learned Member Shri S. L. Kakkar, the learned counsel for the assessee emphasised the line of reasoning adopted by the learned Member Shri Gajendra Singh. The seller in the case - R. S. Seth Kachorimal Sukhlal, the assessee, had an agreement with the buyer M/s Bharat Mining and Export Go. The relevant clauses in the agreement were as under: - "l. The sellers hereby sell to the Buyers the entire output of Manganese Ore which will be raised from the said mining areas of the sellers. 2. The Buyers shall pay to the Sellers the following purchase prices as for manganese ore containing 46 % Mn and above @ Rs. 95/- (Rupees Ninety five only) per ton of 2240 lbs f. o r. Dohad. (b) for manganese ore containing 43% to 45. 99% Mn @ 75/- (Rupees seventy five only per ton of 2240 lbs f. o. r. Dohad. (c) for manganese ore containing Mn below 43% @ Rs. 50/- (Rupees Fifty only per ton of 2240 lbs f. o r. Dohad. 3. The aforesaid rates are for delivery of ores loaded into wagons at Dohad Railway Station, Western Railway, Panchahal Dist. Bombay State. 4. All the Manganese ore raised from the above two of the sellers is sold to the Buyers and the Buyers are at liberty to sell it to any other party or make fore ward contracts for the same. The net weight of Railway Receipt shall be the basis for final accounts for weight of Manganese ore despatched. 10. The Sellers assure the Buyers that during the tenure of this contract he shall not under any circumstances encumber, transfer or assign to any other party the mining areas mentioned-above, or manganese ore contained therein without the prior written consent of the Buyers. " 6. The relevant Sections of the Central Sales Tax Act, Sec. 2 (a), 3 and 4, read as follows: - "2. Definitions - In this Act, unless the context otherwise requires, - (a) "appropriate State" means - (i) in relation to a dealer who has one or more places of business situate in the same State, that State; (ii) in relation to a dealer who has places of business situate in different states, every such State with respect to the place or places of business situate within its territory; Explanations-Place of business" means - (i) in the case of a sale of goods in the course of inter-State trade or commerce falling within clause (a) of Sec. 3, the place from which the goods have been moved by reason of such sale; (ii) in the case of any such sale falling within clause (b) of Sec. 3, the place where the sale is effected;" 3. When is a sale or purchase of goods said to take place in the course of inter-State trade or comnerce - 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. 4. When is a sale or purchase of goods said to take place outside a State - (1) Subject to the provisions contained in Sec. 3, when a sale or purchase of goods is determined in accordance with sub-Sec. (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other states. (2) A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State - (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer whether assent of the other party is prior or subsequent to such appropriation. Explanation - Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of this sub-section shall apply as if there were separate contracts in respect of the goods at each of such places. " The explanation below Sec. 2 (a) was omitted with effect from 1-10-1958 but was in force during the period to which this assessment relates. Now, a sale other than a sale during the course of import or export into or out of the territory of India with which we are not concerned in this case, may be categorised as - (i) a sale wholly inside a state, taxable by the State under powers under entry 54 of list II of the Seventh Schedule to the Constitution, or (ii) a sale wholly outside the State not taxable by it at 11, in view of clause (a) of Art. 286 (1) of the Constitution or (iii) a sale in the course of inter-State trade or commerce, taxable in the State under the Central Sales Tax Act. It is not the case of any of the parties (the assessee or the State of Rajasthan) that this was a case of sale falling under category (i), it is either under category (ii) or (iii), the assessee claiming it to be under (ii), and the State under (iii ). Sec. 3 of the Central Sales Tax Act, reproduced above defines what would be a sale in the course of inter-State trade or commerce. It says unambiguously that a sale would be deemed to take place inter-State trade or commerce (a) if it occasions the movement of goods from one State to another, or (b) if it is effected by transfer of documents during the movement of the goods from one State to another. In the case of (a), the phrase "if the sale occasions the movement of goods from one state to another" has been held by the Supreme Court in the Tax Iron & Steel Co. judgment referred to above to mean", if the movmement of goods from one State to another is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State" (1960 STC 667 ). In the minority judgment in that case also the view was expressed that "a sale occasions a movement of goods when the contract of sale so provides" (1960 STC 679 ). In the instant case, clauses 1 and 4 of the agreement purports to sell (the words used are "hereby sell" in clause 1 and "is sold" in clause (4) all the manganese ore raised from seller's mines, which are specified in the agreement. By clause 4, the buyer is permitted to sell it to any one else, or even to make forward contracts in respect of it. The ore raised from the mines is obviously appropriated to the contract of sale and is deemed as sold, as soon as it is raised. It then is moved from the State of Rajasthan as "incident of the contract of sale". There can be no manner of doubt, therefore, that the movement is occasioned by the sale. There can be no doubt also in view of Section 2 (a) with Explanation thereto, that the Rajasthan State is the appropriate State to collect the tax as the movement of goods is from a place in Rajasthan. That the rates of payment are described as f. o. r. Dohad, which is a place in the Bombay State (clause 2 of the agreement) and are for delivery of the ores loaded in wagons at Dhohad Railway Station (clause 3), or that the basis of payment is to be the nett weight] shown in the Railway receipts (clause 7), are not material for determining that it is a sale in inter-State trade or commerce, and that Rajasthan is the 'appropriate Slate'. These indicate merely the mode of actual delivery and of determining the amounts to be paid by the buyer. That this sale, being a sale in the course of inter-State trade or commerce as discussed above, cannot be regarded as a sale outside the State of Rajasthan-cate-gory (ii) mentioned in para 7 above is clear from following view held by the Supreme Court in the judgment in the Tata Iron & Steel Co. , case in respect of sub-sec. (1) of Sec. 4 side a State of the Central Sales Tax Act, which seeks to define sale out- "but sub-section (1) having been made subject to the provisions contained in Sec. 3 it is evident that only those sales which were not in the course of inter-State trade or commerce should be determined under sub-sec. (1) of Sec 4 as having taken place outside a State" (1960 STC 672 ). In the light of the discussion above, I respectfully agree with the conclusion arrived at by learned Member Shri S. L. Kakkar that the assessment in this case under the Central Sales Tax Act was justified. Learned Member Shri Gajendra Singh, held that since property in the goods did not finally pass at the commencement of the journey in the Rajasthan, there was no sale in inter-State trade and commerce, and consequently this was a sale outside the State of Rajasthan There is, I am afraid, no justification for this view in the light of the Supreme Court judgment in the Tata Iron & Steel Co. case, repeatedly referred to above. In the light of that judgment, it is not necessary for constituting an inter-State sale in terms of clause (a) of sec. 3 of the CST Act that property in the goods must pass before or at the commencement of the movement of goods. All that is necessary is that there must be a sale, and the movement of the goods should be an incident of the contract for the sale. As this was the only point of difference of opinion, between the two learned Members, and I have agreed with the view taken by learned Member Shri S. L. Kakkar, the revision application is rejected. .;