A THIRUVENGADASWAMI IYENGAR Vs. STATE OF MADRAS

JUDGEMENT

(1.) THIS is a revision against the order passed by the Tribunal holding that the assessee is liable to pay tax under the Central Sales Tax Act, 1956 in respect of his inter-State sales for the year 1957-58.

(2.) THE assessee is a paddy and rice merchant carrying on business at Mannargudi. He registered himself as a dealer under the Central Sales Tax Act, 1956. He submitted his return in Form 1 for the year 1957-58 and the Commercial Tax Officer accepted the same and determined the tax turnover at Rs. 5, 24, 457-36 and direct him to pay tax on that amount. He paid the tax. Subsequently after the close of the year in September, 1958, he filed an appeal before the Appellate Assistant Commissioner stating that he was not liable to pay any tax and that he was entitled to a refund of the tax as it was paid under a mistake of law. THE Appellate Assistant Commissioner found that in pursuance of the contracts the assessee despatched goods to Kerala and that therefore it was an inter-State sale as defined in the Central Sales Tax Act, 1956, that the invoice and the demand draft clearly proved that the goods were appropriated to the contract at the assessee's place of business and that the assessee also adopted various safeguards to guarantee the payment of money to him under the bills. On this view, the Appellate Assistant Commissioner dismissed the appeal.

(3.) THIS section lays down the principles for determining when a sale or purchase shall be demanded to take place in the course of inter-State trade or commerce, because under the Act tax imposed only on inter-State transactions. Clause (a) of section 3 provides that the sale or purchase should occasion movement of goods from one State from one State to another. In other words, the goods must move in pursuance of a contract of sale or purchase. But where the goods move from one State to another without any privity of contract the sale or purchase shall not be deemed to be a sale or purchase in the course of inter-State trade or commerce. Clause (b) provides for another type of sale which shall be deemed to be in the course of inter-State trade or commerce. Even where the goods are sent from one State to another without any privity of contract and the sale is effected by a transfer of documents of title when the goods are in transit, such a sale shall be deemed to be a sale in the course of inter-State trade or commerce. In order words, the sale contemplated by clause (b) is one which is effected by transfer of title to the goods during their movement from one State to another.In Tata Iron and Steel Co. Ltd. v. S. R. Sarkar their Lordships of the Supreme Court while discussing the scope of section 3(a) and (b) observed at page 667 :