ARNRITSAR SUGAR MILLS CO LIMITED LORD KRISHNA SUGAR MILLS LIMITED Vs. COMMISSIONER OF SALES TAX UTTAR PRADESH:COMMISSIONER OF SALES TAX UTTAR PRADESH

JUDGEMENT

(1.) THE following Judgment of the court was delivered by

(2.) THESE four appeals by special leave are directed against the judgment of the Allahabad High court in a Sales Tax Reference made by the Judge (Revisions), Sales Tax, Uttar Pradesh, Lucknow, on being directed to do so by the High court under s. 11 of the Uttar Pradesh Sales Tax Act, 1948, hereinafter referred to as the Act. The question referred was as follows : 'Whether in law the revising authority was right in holding that the sales in dispute were not for delivery outside Uttar Pradesh and that the applicant Was not entitled to a rebate under sec. 5 of the Act.'

(3.) THE High court, in view of its finding that the delivery was contracted to be made ex-factory, the factory being within the State of Uttar Pradesh and the contract not containing any condition requiring the assessee to deliver the goods outside Uttar Pradesh, held that rebate was not admissible under s. 5. THE High court said that its detailed reasons were contained in its, judgment in Lord Krishna Sugar Mills v. Commissioner Sales Tax, II.P.(1) In that case Desai, C.J., held that the obligation to deliver goods outside Uttar Pradesh must arise only from a term in the contract, and in the absence of such a term it could, not be said that the goods were to be delivered outside Uttar Pradesh. THE learned chief justice further observed as follows A term in a contract that despatch instructions would be furnished later necessarily means that the seller undertakes to comply with them. If under a contract itself something is to be settled later, what is settled later becomes as much binding under the contract itself as the terms already settled under the contract. Still, I do not think that the sales in those cases in which the contracts provided for despatch instructions to be given later became sales for delivery outside Uttar Pradesh merely because the despatch instructions were that they should be despatched outside Uttar Pradesh. All that can be said is that the sales were for 'delivery in accordance with despatch instructions' and a sale for 'delivery in accordance with despatch instructions' is not necessarily a sale for 'delivery outside Uttar Pradesh.' He seemed to be of the view that in order to come within the expression 'delivery outside Uttar Pradesh' it must be one of the terms settled at the time of the formation of the contract itself that the goods will be delivered outside Uttar Pradesh, and if this is not so settled and all that is settled is that they will be delivered in accordance with despatch instructions, the sale would neither be a sale for delivery outside Uttar Pradesh nor a sale for delivery inside Uttar Pradesh. He was clearly of the view that despatch instructions were not a part of the contract when it was formed and did not get incorporated into it or become a part of it when given. Pathak, J., in a concurring judgment, was of the view that it must be in the contemplation of the parties at the time of entering into the contract that the goods which were the subject of sale must be delivered outside Uttar Pradesh. He observed that 'there is a distinction between settling and determining the terms of a contract and complying with the terms 'of that contract. THE former relates to the formation of the contract, the latter to its execution.'