STATE OF GUJARAT Vs. BOMBAY METAL ALLOYS AND MFG CO PVT LTD

JUDGEMENT

(1.) THE applicant in Sales Tax Reference No. 4 of 1981 (hereinafter referred to as "the applicant-company") is a private limited company registered under the Companies Act, 1956. THE applicant-company carries on the business of manufacturing and selling ferrous and non-ferrous metals at Bombay where it is registered as a dealer under the Bombay Sales Tax Act, 1959. THE applicant-company is not carrying on any business and it has no place of business within the State of Gujarat.

(2.) THE Western Railway authorities at Sabarmati in Ahmedabad, held a public auction for the sale of non-ferrous metal scrap by description through an auctioneer carrying on business at Bombay. THE auction was held at Sabarmati in Ahmedabad on 13th March, 1973. At the said auction the applicant-company's bid to purchase the scrap at the rate of Rs. 11,280 per metric tonne being the highest was accepted. At the time of acceptance of the bid, the goods in question which were lying in the Sabarmati Railway Yard were not ascertained and specific and they were not in a deliverable state. Between 13th March, 1973, i. e. , the day on which the auction was held, and 17th March, 1973, the applicant company instructed the railway authorities at Sabarmati to weigh the goods in question and to arrange for their delivery at Bombay. THE railway authorities thereupon despatched the goods in question to the applicant-company in two lots by loading them in two motor trucks on one occasion, and in one motor truck on another occasion. Goods weighing 16,174 kgs. (as weighed on beam scale) were despatched in two motor trucks bearing Nos. M. R. R. 8564 and G. T. D. 5049 on 17th March, 1973. Goods weighing 3,826 kgs. (as weighed on beam scale) were despatched in motor truck No. G. T. A. 3128 on 27th March, 1973. According to the applicant-company, after the goods were loaded in the trucks and weighed for being despatched to Bombay, the price thereof was determined and paid by the applicant-company to the railway authorities. At the time of the despatch of the goods in the two above-mentioned lots, the railway authorities issued two "sale issue notes", which, inter alia, mentioned the description of the goods, their quantity and value, and the name of the applicant-company as the purchaser. THE sale issue notes were signed by an officer of the railway administration and by a representative of the applicant-company. THE sale issue notes show that the railway administration recovered from the applicant-company only the price of the goods covered by each sale issue note and that no extra amount was charged for making arrangement for the despatch of the goods to Bombay. In the transport receipt which the transport contractors and commission agents issued in respect of the goods loaded in each truck on the two different occasions, the Western Railway, Sabarmati, Ahmedabad, was shown as the consignor, and the applicant-company was shown as the consignee. THE transport receipts, which were on the record of the sales tax authorities and copies whereof are taken on the record of this reference as annexure 5 (colly.) with the consent of the parties, show that the freight was to be paid by the consignee at the destination. No charges for hamali are shown as recoverable from the consignee nor are they shown as having been paid by the consignor to the transport contractors. Admittedly, the applicant-company paid the transport charges for the carriage of the goods from Sabarmati to Bombay, and it accordingly got delivery of the goods at Bombay.

(3.) THE applicant-company feeling aggrieved by the determination of the Deputy Commissioner, filed an appeal before the Gujarat Sales Tax Tribunal (hereinafter referred to as "the Tribunal" ). THE Tribunal observed that in the absence of any contract of sale reduced into writing, the nature and character of the transaction in question was required to be determined on the basis of the materials on record. Having considered the relevant facts and circumstances, the Tribunal held that : (1) at the time of auction, the goods were neither ascertained nor weighed and that the precise price payable for them was not determined though the rate of purchase was agreed upon; (2) it was only on 27th March, 1973, that the railway authorities finally segregated and completed the weighment of the entire quantity of the goods sold and it was then ascertained that 20 metric tonnes of goods were purchased by the applicant-company at the auction held on 13th March, 1973; (3) the goods were actually appropriated towards the contract of sale only after they were loaded in the three motor trucks and weighed thereafter, and the property in the goods passed to the applicant-company not on the completion of the auction on 13th March, 1973, but on 27th March, 1973, when the entire goods were appropriated towards the contract and delivered to the transport contractors for their carriage from Sabarmati to Bombay; (4) before a completed sale came into existence accordingly, the applicant-company had instructed the railway authorities to arrange for the despatch and delivery of the goods at Bombay and the railway authorities appeared to have undertaken and actually done so far and on behalf of the applicant-company; and (5) the transaction in question was, therefore, a purchase of goods in the course of inter-State trade within the meaning of section 3 (a) of the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Act" ). Be it stated that the Tribunal has found that there was no prior stipulation, express or implied, between the Western Railway and the applicant-company in the "original contract" itself, providing for despatch or movement of goods from Sabarmati to Bombay, and that therefore, the movement of the goods was not the result of any such prior agreement. However, in the opinion of the Tribunal, since the applicant-company had instructed the railway administration between 13th March, 1973, and 17th March, 1973, before the sale was complete, to send the goods from Sabarmati to Bombay, and the Western Railway had, pursuant to such instructions, packed and weighed the goods after loading them in the trucks and despatched them to Bombay, there was a conceivable link between the movement of the goods from Sabarmati to Bombay and the contract of purchase. In the aforesaid view of the matter, the Tribunal held that the purchase of the goods in question was in the course of inter-State trade and that it was not liable to levy of purchase tax under section 15 of the Act. THE Tribunal found in the alternative that if the disputed purchase was to be regarded as a local purchase governed by the provisions of the Act and not a purchase taking place in the course of inter-State trade or commerce within the meaning of section 3 (a) of the Central Act, then the applicant-company was a "dealer" within the meaning of section 2 (10) of the Act in regard to the purchase of the goods in question because the transaction was in connection with its business within the meaning of section 2 (4) (i) of the Act, and that on such turnover of purchase the applicant-company was liable to pay purchase tax under section 15 of the Act after allowing a deduction of Rs. 30,000. Even in such a case, however, according to the Tribunal, the applicant-company was not liable to be registered as a dealer under sub-section (1) of section 29 of the Act.