Inter-State sale and constructive delivery limit Assam sales tax where goods are despatched outside the State under the contract.

For State sales tax purposes, a sale is completed only when property in the goods passes in the manner contemplated by the contract; consultation of the Sale of Goods Act is permissible for that limited purpose, but an inter-State transaction is excluded from the Assam Act's definition of sale. Delivery to a carrier in Assam was treated as constructive delivery, not actual delivery to the consignee, where the contract required inspection, acceptance, branding, loading and despatch under continuing control and risk remained with the contractor until destination. On that basis, the movement of wooden sleepers from Assam to outside the State was characterised as inter-State trade and not a taxable intra-State sale.

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Issues: (i) Whether section 23(2) of the Indian Sale of Goods Act, 1930 could be relied upon in applying section 2(12) of the Assam Sales Tax Act, 1947; (ii) Whether the delivery and despatch of wooden sleepers from stations in Assam to stations outside Assam amounted to a taxable sale within Assam; (iii) Whether the assessments and levy of sales tax were barred by Article 286(1)(a) and/or Article 286(2) of the Constitution of India.

Issue (i): Whether section 23(2) of the Indian Sale of Goods Act, 1930 could be relied upon in applying section 2(12) of the Assam Sales Tax Act, 1947.

Analysis: The definition of sale under the Assam Act turned on the transfer of property in goods. For ascertaining when property passes, the provisions of the Sale of Goods Act could be consulted, but section 3(1A) of the Assam Act excluded sales of an inter-State character from the statutory definition. On that footing, section 23(2) was not the material provision for applying section 2(12) to a transaction that was in substance inter-State.

Conclusion: The question was answered in the negative.

Issue (ii): Whether the delivery and despatch of wooden sleepers from stations in Assam to stations outside Assam amounted to a taxable sale within Assam.

Analysis: The contract required inspection, passing, branding, loading and despatch under detailed control, and the goods remained at the contractor's risk until finally accepted at destination. The arrangement distinguished between handing over to a carrier and actual delivery to the consignee. Delivery to a carrier was only constructive delivery and did not amount to actual delivery within Assam for the purpose of completing the sale there. The movement of the goods outside Assam showed the transaction to be one of inter-State character.

Conclusion: The question was answered in the negative.

Issue (iii): Whether the assessments and levy of sales tax were barred by Article 286(1)(a) and/or Article 286(2) of the Constitution of India.

Analysis: The sales were not completed by actual delivery within Assam and were intended for despatch and delivery outside the State. They were therefore outside sales in relation to Assam and also sales in the course of inter-State trade or commerce. Article 286(1)(a) and the corresponding provision in section 3(1A)(i) barred taxation by Assam, and Article 286(2) with section 3(1A)(iii) also protected such sales during the relevant period notwithstanding the Sales Tax Laws Validation Act, 1956.

Conclusion: The levy was hit by both constitutional restrictions, and this part of the question was answered in the affirmative.

Final Conclusion: The reference was answered by holding that the impugned sales were not taxable as intra-State sales in Assam, though the constitutional challenge to the levy succeeded only in part because the sales were nevertheless treated as inter-State transactions immune from State taxation.

Ratio Decidendi: For State sales tax purposes, a transaction is not completed within the taxing State merely because goods are passed and handed to a carrier there; where the contract contemplates actual delivery to the consignee outside the State and the movement is part of inter-State trade, the sale is outside the State's taxing power and is protected by Article 286.

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