TaxTMI 
TaxTMI 
1981 (2) TMI 206
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....r, Simla, were not sales in the course of inter-State trade or commerce?" M/s. Delhi Cloth and General Mills (the assessee), manufacturers of vanaspati, sold certain quantities of vanaspati ghee to the State of Jammu and Kashmir and to the office of Special Police Establishment, Indo-Tibetan Border, Simla. The case of Delhi Cloth Mills was that these were sales in the course of inter-State trade or commerce and would not be liable to be taxed under the local Act. The authorities, however, rejected this plea. On appeal to the Tribunal, it agreed that the authorities below had correctly held that the sales were not inter-State sales. On a reference being sought by Delhi Cloth Mills, the abovesaid question of law has been referred to this Cour....
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....o be in the course of inter-State trade or commerce, on the erroneous assumption that the sales could not be in the course of inter-State trade and commerce merely because the property had passed in Delhi. Mr. Chawla is no doubt right in his contention. In order that a sale may be regarded as inter-State sale, it is immaterial whether the property in the goods passes in one State or another: see Union of India v. K.G. Khosla & Co. Ltd.[1979] 43 S.T.C. 457 (S.C.); A.I.R. 1979 S.C. 1160. So the mere fact that property may have passed in Delhi will not determine the question. But it is not correct to say that the Tribunal has gone only into that aspect. The Tribunal has applied the tests laid down in Balabhagas Hulaschand v. State of Orissa[19....
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.... quantity was supplied again as per payment and asking for immediate supply as trucks for transhipment were being detained, vide letter of 20th June, 1966. It is also not disputed that the sale note was made in the name of the Trade Commissioner, Jammu and Kashmir, Delhi, though destination was mentioned as Jammu. Now, nowhere from this correspondence can we find any stipulation regarding the movement of goods, an essential condition to be in the course of inter-State trade or commerce. The suggestion of Mr. Chawla is that here undoubtedly the buyer was the State of Jammu and Kashmir which was outside Delhi. The form D which is equivalent to form C so far as the Government is concerned and which is meant to be given for inter-State sales wa....
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....ract of sale. In the present case this essential condition is totally lacking. Now, in the instant case no doubt the goods sold by the applicant may have gone to Jammu and Kashmir but what is material to emphasise is that this movement of goods from Delhi to Jammu and Kashmir was not as a result of any stipulation in the contract of sale between the applicant and the State of Jammu and Kashmir. The mere fact that the Jammu and Kashmir Government purchased the goods and then transported them to Jammu and Kashmir does not mean that there was an agreement between the parties that they would be so taken out of Delhi. If, for whatever reason, after having paid the price and taken the delivery of goods from the applicant, the Jammu and Kashmir Go....
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....ods, as was the position in the Telco's case[1971] 27 S.T.C. 127 (S.C.). In the present case, the only liability which the applicant was undertaking by means of its letter of 7th May, 1966, was to supply the particular quantity and to give the delivery in Delhi. As a matter of fact, if any contract is to be spelt out, the maximum that the applicant could be made liable was to supply the said quantity to the Trade Commissioner at Delhi. The Jammu and Kashmir Government could not have compelled the applicant to supply the goods in Jammu and Kashmir. It is evident, therefore, that the movement of goods from Delhi to Jammu and Kashmir was not occasioned by any contract or as an incident to the contract. The Tribunal's finding cannot, therefore,....