Endorsement of railway receipts in transit treated as inter-State sale, with Tamil Nadu competent to levy tax under the proviso.

Endorsement of railway receipts during transit was treated as a sale in the course of movement under section 3(b) of the Central Sales Tax Act because the goods were ascertained, appropriated to the contract, and the documents of title were endorsed after loading but before delivery to the buyer. Later payment and final acceptance did not alter the transfer of property or take the transaction outside section 3(b). The proviso to section 9(1) applied because the prescribed form had been obtained in Tamil Nadu, making Tamil Nadu the State competent to levy and collect tax on the subsequent inter-State sale. Section 6(2) was held inapplicable.

---

---

Issues: Whether the sales effected by endorsement of railway receipts during transit from Bombay to Kerala fell within section 3(b) of the Central Sales Tax Act, 1956 and, if so, whether Tamil Nadu was the State competent to levy and collect tax under section 9(1) of that Act.

Analysis: The goods were delivered to the common carrier for transmission to Kerala, and the railway receipts were endorsed after the goods had been put on board the train but before delivery to the purchaser. On the contract terms, the goods were identified by description, supplied in conformity with the contract, and treated as ascertained or ascertainable goods appropriated to the contract when the documents were endorsed. The circumstance that payment and final acceptance followed later did not postpone the transfer of property so as to take the transaction outside section 3(b). Since the assessee had obtained the prescribed form in Tamil Nadu in connection with the purchase from Bombay, the case attracted the proviso to section 9(1), making this State the State from which the subsequent sale was effected and therefore the State entitled to levy and collect the tax. Section 6(2) was not applicable.

Conclusion: The sales fell within section 3(b) of the Central Sales Tax Act, 1956, and Tamil Nadu was competent to assess and collect the tax under section 9(1), proviso.

Ratio Decidendi: Where goods are ascertained or ascertainable, and documents of title are endorsed after delivery to the carrier but before delivery to the purchaser, the transaction is a sale during movement of goods within section 3(b), and the proviso to section 9(1) governs the State entitled to levy and collect the tax on a subsequent inter-State sale.

---