Sales tax requires a completed sale transferring title; a mere agreement to sell cannot sustain the levy.

Sales tax under the Orissa Sales Tax Act could be imposed only on a completed sale involving transfer of title. A mere contract for sale within the province, even coupled with export of the goods, was insufficient because an agreement to sell does not amount to a taxable sale. The later authorities relied on by the taxing side were distinguished as factually and constitutionally different, and did not alter the rule that taxing power extends only to completed sales. The assessment was therefore held invalid and the reference was answered in favour of the assessee.

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Issues: Whether an assessment to sales tax under the Orissa Sales Tax Act, 1947 could validly be founded merely on a contract for sale within Orissa coupled with export of the goods from Orissa, without proof of a completed sale.

Analysis: The reference turned on the distinction between a completed sale and an agreement to sell. The governing principle applied was that sales tax could be imposed only where there was a completed sale involving transfer of title and not where the transaction remained a mere contract to sell. The later decisions relied upon by the taxing authorities were distinguished because they dealt with different factual and constitutional settings and did not decide the precise question whether a mere contract for sale within the Province and export of goods could itself sustain the levy. The Court therefore followed the Supreme Court's ruling that the taxing power extends to completed sales only and cannot be enlarged by treating forward contracts or bare agreements to sell as sales.

Conclusion: The assessment was not legal. The question was answered in the negative and the reference was disposed of in favour of the assessee.

Ratio Decidendi: Sales tax can be levied only on a completed sale transferring title, and not on a mere agreement to sell or contract for sale.

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