NAMRATA MARBLE TRADERS Vs. INTELLIGENCE OFFICER-I OFFICE OF INSPECTING ASSISTANT COMMISSIONER INTELLIGENCE AGRL INCOME-TAX AND SALES TAX

JUDGEMENT

(1.) WHEN C. M. P. No. 1426 of 1991 came up for orders, learned counsel appearing on either side wanted the original petition to be heard and disposed of. Accordingly I heard them at length. I am disposing of the original petition.

(2.) PETITIONER is a registered firm, doing business in marble in Rajasthan. They are registered as dealers under the Rajasthan Sales Tax Act, 1954, as well as under the Central Sales Tax Act, 1956. The firm is having a liaison and administrative office at Ernakulam for facilitating their business by obtaining orders from parties. Whenever the firm receives orders from Kerala for supply of marble, the goods are supplied directly to the parties, who place the orders. The office at Ernakulam is not doing any business in marble. The administrative office at Ernakulam has not been registered as a dealer under the Kerala General Sales Tax Act, 1963 or under the Central Sales Tax Act. Thrissur Heart Hospital Ltd. , second respondent, is constructing a hospital building. Second respondent is to supply marble and some other articles to the contractor, who had taken up the contract for the construction of the building. Therefore second respondent placed orders with the petitioner for the supply of marble tiles. It was provided in the orders that the supply should be at the site at Thrissur. On receipt of the order, petitioner-firm sent marble tiles from Rajasthan to Thrissur by road as well as by rail. The value of the marbles comes to Rs. 1,90,894. Central sales tax at the rate of 15 per cent of the value has also been levied. These facts are evident from the bills issued to the second respondent. One of the consignments sent from Rajasthan was detained by the first respondent. He verified the documents mentioned in section 29 of the Kerala General Sales Tax Act (hereinafter referred to as "the Act") and rule 35 of the Rules framed thereunder. Since he did not release the goods, petitioner moved this Court by filing O. P. 7002 of 1990. This Court directed the first respondent to release the vehicles and goods on furnishing bank guarantee for an amount of Rs. 75,000. PETITIONER complied with that direction and consequently the first respondent released the vehicles and the goods. Since the petitioner is not an assessee under the Act and he is not liable to pay any tax in the State of Kerala, first respondent cannot take any step for realising any amount from him. First respondent has issued exhibit P8 letter to the second respondent requesting them to stop payments to the petitioner or any person claiming under them till they get tax clearance from his office. The action taken by the first respondent is under challenge.

(3.) SUPREME Court in Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207, considered the circumstances which constitute an inter-State sale. According to their Lordships on the satisfaction of the following conditions a sale can be said to have taken place in the course of inter-State trade or commerce : (i) that there is an agreement to sell which contains a stipulation express or implied, regarding the movement of the goods from one State to another; (ii) that in pursuance of the said contract the goods in fact moved from one State to another; and (iii) that ultimately a concluded sale takes place in the State where the goods are sent which must be different from the State from which the goods move. In the instant case one has to examine whether the transaction entered into between the petitioner and the second respondent satisfies these conditions. Exhibit R1 (c) produced by the first respondent proves that the terms and conditions suggested by the petitioner in exhibit R1 (a) have been accepted by the second respondent. The condition mentioned in exhibit R1 (a) are that the goods are to be delivered at the building site at Thrissur on the price mentioned therein. The rate mentioned is inclusive of all taxes and unloading charges at Thrissur. In pursuance of that agreement, the goods moved from Rajasthan to Thrissur and they were delivered at the building site of the second respondent. The property in the goods transferred from the petitioner to second respondent at Thrissur, where delivery is effected. Thus it can safely be held that all the conditions mentioned by their Lordships have been satisfied in the instant case. It, therefore follows that the transaction entered into between the petitioner and the second respondent is nothing other than an inter-State sale.