Amendment status not verified — confirm the current text below against the official source.
State of Madhya Pradesh v. Bengal Paper Mills Company Ltd., (1979) M.P.L.J. 478 at D. 480. SECTION 3 WHEN IS A SALE OR PURCHASE OF GOODS SAID TO TAKE PLACE 9 IN THE COURSE OF INTER-STATE TRADE OR COMMERCE decision of the Supreme Court in Tata Iron and Steel Co. u. Sarkar. r On the strength of the said decision of the Supreme Court counsel for the assessee contended that the Tribunal committed an error in imposing the tax under Sec.3(b) of the Central Sales-tax Act. The Court held that since no tax could be imposed under Sec.3(b) of the Central Sales-tax Act on the facts of the case, the order passed by the Tribunal cannot be sustained. ) Contract of sale—Requirement of.--It is true that the contracts of sales does not require or provide that goods shall be moved from one place to another. But it is not true to say that for the purposes Sec. 3 (a) of the Central Sales-tax Act, it is necessary that the contract of sale must itself provide for and cause the movement of goods or that the movement of goods must be occasioned specifically in accordance with the terms of the contract of sale. 3 Sales in the course of inter-State sales.—The findings of the Tribunal are that the assessee who is a commission agent, placed an order of despatch of the goods to ex-U.P. principal with the selling dealer. The selling dealer booked the goods with the railways and got the railway receipt prepared in the name of the selling dealer. The selling dealer then endorsed the railway receipt in the name of the assessee who in its turn endorsed the same to ex-U.P. principal. On these facts, Sec.3(b) of the Central Sales-tax Act would be clearly applicable and the sales would be sales in the course of inter-State sales. The findings recorded by the Tribunal are that the assessee placed the orders on the selling dealer in Uttar Pradesh and asked them to despatch the goods to ex-U.P. principal. The railway receipts were prepared by the selling dealer in their own name and then endorsed in the name of the assessee who in its turn endorsed them in favour of the ex-U.P. principal. On these facts, there can be no manner of doubt that the sales in question were sales in the course of inter-State sales. 4 Transfers effected by the assessee when could not be said to be inter-State sale.—The assessee in the present case was a manufacturer of pencils and has a factory at Ghaziabad and a head office at Delhi. The assessee's case was that. he made pencils which were not completely finished at Ghaziabad awl then transported them to Delhi where they were finished and sold to various customers. The authorities levied Central Sales-tax on the assessee. It is well known that before a sale can be said to be an inter-State sale, (i) there must be an agreement to sell which contains a stipulation express or implied, regarding the movement of the goods from one State to another: ((i) that in pursuance of the said contract the goods in fact moved from one State to another and that ultimately a concluded sale takes place in the State where the goods are sent which must he different from the State from which the goods move. There is no evidence in this case to show that there was any completed contract between the assessee's factory at Ghaziabad with any specific customers for the sales of goods with ex-U.P. buyer. In the absence of any such findings, the movement of goods from Ghaziabad to the head office in Delhi can only be treated as stock transfers. The order of the Tribunal was set aside and it was held that the transfer effected by the assessee was not inter-State sales. 5 For the purpose of Sec.3 of the Central Sales Tax Act, 1956, it has to be examined whether the movement of goods had taken place from inside the State to outside State in pursuance of prior contact of sales or not. Unless it is established that the movement of goods had taken place outside the State in pursuance of prior contract of sale, it cannot be taxed and classified as inter-State sale.