Inter-State sale by contract-linked movement of goods barred West Bengal sales tax jurisdiction and supported Bihar writ jurisdiction.

Movement of stone boulders from Bihar to West Bengal pursuant to the tender and work orders was held to be occasioned by the contract, making the transaction an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956. On that basis, the Bengal Finance (Sales Tax) Act, 1941 could not validly be applied to tax the transaction. The West Bengal taxing authority was found to have no jurisdiction to assess the petitioners, and the notices and assessment order were quashed. The cause of action was held to have arisen in Bihar because the goods moved from there and the impugned notices and order were served there, making the writ petition maintainable in Bihar.

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Issues: (i) Whether the supply of stone boulders from Bihar to West Bengal under the contract constituted an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956, so that tax could not be levied under the Bengal Finance (Sales Tax) Act, 1941. (ii) Whether the West Bengal taxing authority had jurisdiction to assess the petitioners under the Bengal Finance (Sales Tax) Act, 1941, and whether the writ petition was maintainable in Bihar on the basis of the cause of action.

Issue (i): Whether the supply of stone boulders from Bihar to West Bengal under the contract constituted an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956, so that tax could not be levied under the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The movement of the goods from Bihar to West Bengal was not independent of the bargain but was occasioned by and incidental to the contract between the parties. There was no independent stock-yard or separate sale arrangement in West Bengal; the goods were transported for delivery and inspection at the contract sites pursuant to the tender and work orders. On these facts, the sale was completed in the course of inter-State trade, attracting the Central Sales Tax regime rather than the Bengal Act. The Court distinguished cases where movement of goods was unrelated to the contract and treated the contract-linked movement as decisive.

Conclusion: The transaction was an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956, and the Bengal Finance (Sales Tax) Act, 1941 could not validly be invoked to tax it.

Issue (ii): Whether the West Bengal taxing authority had jurisdiction to assess the petitioners under the Bengal Finance (Sales Tax) Act, 1941, and whether the writ petition was maintainable in Bihar on the basis of the cause of action.

Analysis: Since the concluded sale and the taxable incident were referable to the movement of goods from Bihar, the competent authority for levy under the Central Sales Tax Act was the State from which the goods moved. The assessment and notice issued by the West Bengal authority therefore amounted to an unlawful assumption of jurisdiction. The notices and assessment order were also served on the petitioners at Bihar, and the bundle of facts constituting the cause of action arose there. Accordingly, the Bihar High Court had jurisdiction to entertain the writ petition.

Conclusion: The West Bengal authority lacked jurisdiction to assess the petitioners under the Bengal Finance (Sales Tax) Act, 1941, and the writ petition was maintainable in Bihar.

Final Conclusion: The impugned assessment order and notice were quashed because the sale was inter-State, the taxing power lay outside West Bengal, and the cause of action arose in Bihar.

Ratio Decidendi: Where movement of goods from one State to another is occasioned by and incidental to the contract of sale, the transaction is an inter-State sale, and the State of origin alone has competence under the Central Sales Tax framework to levy tax; a contrary assessment by another State is without jurisdiction.

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