TaxTMI 
TaxTMI 
1966 (9) TMI 127
X X X X Extracts X X X X
X X X X Extracts X X X X
....he seller was liable to tax on the turnover for which the goods are sold by him at such point. By the notification dated 28th September, 1957, the taxable point in respect of liquors was specified as the first sale in the State by a dealer who is not exempted from taxation under section 3(3). It is not claimed that the petitioner was exempted from taxation under section 3(3). Thus in respect of beer for the purpose of assessment for the year 1962-63, the taxable point was the first sale in the State and such single point tax was at 40 paise in the rupee. The Kerala General Sales Tax Act was passed repealing the General Sales Tax Act, 1125, with effect from 1st April, 1963. For the purpose of assessment for the year 1963-64, the Kerala Act is applicable. Under that Act also, the point of levy of tax on liquors other than toddy is the same. Beer, therefore, is taxable at the point of first sale in the State by a dealer who is not exempt under section 5, the charging section. For the assessment year 1963-64, the rate was enhanced from 40 per cent. to 50 per cent., i.e., 50 paise in the rupee. The question of exemption from sales tax raised in this writ petition relates only to the sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s were held as the stock of the distributor until the concerned invoices were received from the distributor. Petitioner's case is that for the period in question it was purchasing beer from McDowell & Co., Shertallai, which were being purchased by M/s. McDowell & Co., from the United Breweries Ltd., Bangalore. According to the petitioner, sales by United Breweries Ltd., Bangalore, to M/s. McDowell & Co., were inter-State sales and the sales by McDowell & Co., Shertallai, to the petitioner were the first sales in the State by a dealer who was not exempted under the relevant charging section, and therefore the sales by the petitioner to its customers were not first sales in the State, and were not liable to be taxed. Petitioner contends that the sales by McDowell & Co., Ltd., were the first sales in the State, and therefore those sales alone will attract liability to tax and that McDowell & Co., Ltd., Shertallai, had paid the tax in respect of the sales in question. 2.. The respondent held in his orders exhibits P-3 and P-4 that the sales by M/s. United Breweries Ltd., Bangalore, were to the petitioner, and therefore the sales by the petitioner to its customers were the first sale....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-State trade or commerce if the sale or purchase- (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another." Section 5 of that Act is also relevant, and it reads: "5. (1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India." In order that a sale may be an inter-State sale, the movement of the goods from one State to another must have been occasioned on account of the sale. If under a contract of sale, movement of goods from one State to another is contemplated or if such movement is a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by McDowell & Co., Ltd., to the petitioner. Until that time, the petitioner was only in custody of the goods on behalf of McDowell & Co., Ltd. It was open to McDowell & Co., Ltd., to divert the goods for any other purpose although the goods had been consigned in the name of the petitioner. The property in the goods did not pass to the petitioner until after the invoices were received by it and it cannot also be said that the movement of goods from Bangalore to Ernakulam was under any contract between the petitioner and the United Breweries Ltd., Bangalore. In support of the contention that the sales to the petitioner were inter-State sales, the learned Government Pleader placed reliance on the ruling reported in Khosla & Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes[1966] 17 S.T.C. 473. In that case the assessee in question there entered into a contract with the Director-General of Supplies and Disposals, New Delhi, for the supply of axle-box bodies. The goods were to be manufactured in Belgium according to specifications and the D.G.I.S.D., London, or his representative had to inspect the goods at the works of the manufacturers and issue an inspection certificate. Anot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cDowell & Co. could have diverted the goods for other purposes. The taking of the import permits in the name of the petitioner and the transportation of the goods from Bangalore to Ernakulam instead of to Shertallai would not make any change in the legal character of the transactions. I think, the present case would come within the ambit of the principle in Gandhi Sons v. Sales Tax Officer[1963] 14 S.T.C. 304. The petitioners there purchased certain goods from the local market after receipt of orders for such goods from buyers in other States or outside India. The Court held that such purchases would not come under the Central Sales Tax Act, 1956, inasmuch as the purchases did not occasion the movement of the goods from the Kerala State. It was also held that the fact that the purchases were after securing the orders and before the despatch of the goods is not by itself sufficient to forge the causal connections between the purchases and the movement which are essential for earning the exemption provided. I hold that sales by the petitioner to its customers were not the first sales in the State and the sales are not liable to taxed. 6.. It was submitted by the learned Government....