TaxTMI 
TaxTMI 
1968 (8) TMI 173
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....ting to be under the Central Sales Tax Act, 1956, claiming that for the assessment year 1961-62 there has been an escapement of assessment in so far as sales in the course of inter-State trade and commerce of the company was concerned and proposed to determine such escaped turnover under inter-State sales which, according to the first respondent, amounted to Rs. 30,00,000 and proposed that a 10 per cent. levy of tax is exigible in relation to such escapement under section 8(2) of the Central Sales Tax Act, 1956, as no declaration in Form 'C' was filed before him. The petitioner objected to such reopening both factually and legally. Overruling the objection the impugned order of assessment was made. The petitioner's contention was that the alleged escapement related to intra-State sales of cement in Calcutta and the same was assessed and brought to tax under the West Bengal Sales Tax Act. The petitioner states that during the relevant period the Cement Control Order, 1958, was in force, which legally obliged the State Trading Corporation of India Limited to acquire the entire production of cement at the various factories in India including the Dalmiapuram factory of Dalmia Cement (B....
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....the Cement Factory required supply cement Quantity Name of Railway Station to which cement is to be booked Remarks 1 2 3 4 5 The Cement Distributors (P.) Ltd., "Stephen House", Mission Road, Calcutta. Dalmiapuram Factory Allotment for the period IV/1961 9,000 Metric tonnes (Ninethousand tonnes only)for distribution to Calcutta area as directed by the Regional Cement Officer, S.T.C., Calcutta. Full details of the purpose for which and the For consumption in place at which cement will actually be consumed. Calcutta area. Reference:- i. Ministry of C. & J., New Delhi, No. Cem10(1 0)161 dt. 26-9-196 1. ii. iii. For The State Trading Corporation of India Ltd. Sd/-Regional Cement Officer. Copy to:- 1. The person named in Col. 1. (By Registered Post) The authorisation enables the petitioner to sell the quantity of cement mentioned therein to the person in whose favour the authorisation is issued. It is said that such a sale will be deemed to be a direct sale between the petitioner and the purchaser. It is however significant that the name of the purchaser is not to be found in this auth....
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....nt Officer. Copy to: The person in Col. 1. (By Registered Post) * * * *" It is seen in this letter of allotment that a similar form as that utilised by the State Trading Corporation of India Limited while directing a transfer of cement from Madras office to the Calcutta office of the petitioner has been used in the case of the allotment letter authorising the Executive Engineer to secure the supplies needed by him. Here also, the expression used is that the sale will be a direct deal between the branch office of the petitioner-company at Calcutta and the purchaser. One significant recital in this letter of authorisation or allotment is that the delivery of such cement is to be ex-Calcutta jetty/Docks. The common feature in both the authorisations referred to is that it related to the allotment period IV/61. Thus, 9,000 tonnes were to be sent by the petitioner to its branch office at Calcutta as per the first authorisation cited above and the branch office at Calcutta which is apparently expected to take delivery of the same, is to ascertain and apportion the quantities of cement required by the respective purchasers and as allotted to them b....
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....cured the goods after inspection and after it was separated from the bulk and under chalan evidencing such delivery. The petitioner's branch at Calcutta thereafter made out an invoice and collected the price from the purchaser. It is reported that there is no sales tax charged on sales of cement under the West Bengal Sales Tax Act. It is not in dispute that at no time the petitioner-company despatched the allotted quantity of cement to the respective allottees in Calcutta by rail. In so far as the transactions in question are concerned, they were all the subject-matter of bulk shipments from Cuddalore Port to Calcutta Port and the goods allotted to the ultimate buyer, whoever it may be, was ascertained and separated from the bulk so shipped and after such ascertainment the goods were delivered to the buyer at Calcutta at jetty or Docks as the case may be. In the light of such facts as disclosed before us, though not before the assessing authority, it is necessary to find what really the parties said, wrote and did. As almost all contracts are executory in scope, the terms thereof can be discovered only in relation to the manifest intention of the parties connected with the contract....
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.... an out-of-State sale. Section 4 reads: "(1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. (2) A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State- (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation." To a great extent, the sale of unascertained goods, in the case of inter-State sales involving inter-State movement, has been placed in pari materia for certain purposes with a sale of such unspecified goods under the appropriate provision of the Sale of Goods Act. Whereas section 3 of the Central Sales Tax Act makes a sale of ascertained goods exigible to tax by the despatching State by reason of the movement of the goods having been occasioned under the contr....
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....e of sales which are not in the course of inter-State trade or commerce." Indeed the Supreme Court in that case rejected the argument that certain difficulties may be posed in the case of unascertained or future goods. At page 672 the learned judges observed: "The argument that by the application of section 4, sub-section (2), in cases where the goods sold are unascertained or future goods, there will be difficulty in ascertaining the place where the sale is effected, has also no force. In any event, section 4(2) may not be denied its full operation, merely because difficulty may be encountered in some cases in ascertaining the place where it is effected by the application of the rules set out therein." The following excerpts from Larsen and Toubro Limited v. Joint Commercial Tax Officer[1967] 20 S.T.C. 150 at 185-186. to which my very learned brother Veeraswami, J., was a party, are apposite to the discussion: "...no concept of inter-State trade can be comprehensive without knowing what is an outside sale and, therefore, an inside sale. An inside sale or an outside sale is related to its situs and if the situs of an inside sale is fixed on certain tests, what is no....
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.... effect, yet in the case of sale of goods which are unascertained, and which move from one State to another, it has to be adjudged not only from the point of view of physical inter-State movement of the same but also from the judicial perspective as to which is the situs for jurisdiction to tax it. The indicia in section 3 of the Act are decisive of the character of the transaction and no more; but section 4 is a guide to fix the situs for jurisdiction to make such sales exigible to tax. As pointed out by the learned Judges in Larsen and Toubro Limited v. Joint Commercial Tax Officer[1967] 20 S.T.C. 150 at 186. : "Once the tests under section 4(2) are answered in favour of a State, that becomes the appropriate State having jurisdiction to tax the sale or purchase and no other State will have the power to tax the same transaction." Learned counsel for the State, however, relied upon two decisions of the Supreme Court in support of his contention that the sales in question are exigible to tax as inter-State sales. He referred to The Cement Marketing Company of India (Private) Limited v. The State of Mysore[1963] 14 S.T.C. 175. and The State Trading Corporation of India L....
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....us to pronounce an opinion thereto. The petitioner should succeed on yet another ground. The petitioner's case is that the impugned order has not been passed within the prescribed period of five years as provided for by section 16(1) of the Madras General Sales Tax Act which is attracted in this case by reason of rule 5(7) of the Central Sales Tax (Madras) Rules, 1957, and section 9(3) of Act 74 of 1956. No doubt, the vires of rule 5(7) of the Central Sales Tax (Madras) Rules was raised, but it was not pursued. The argument, however, ultimately rested on facts. The contention was that, conceding that the authority had the power to revise the assessment within a period of five years, such period having expired on 31st March, 1967, and no assessment in fact having been made by then, the present order which according to the petitioner was passed on 5th April, 1967, is without jurisdiction and is unenforceable. He has invited our attention to the order served on the petitioner by the authority. It is very unfortunate for us to comment that in this case there is considerable doubt on the face of the order whether it was signed on 31st March, 1967, at all. We find distinctly that the ....