Judgment

GROVER, J.: The only point for determination in these appeals by certificate is whether certain sales of motor vehicles manufactured by the appellant were inter-State sales and were liable to tax under the provisions of the Central Sales Tax Act, 1956, hereinafter called "the Act".

2. The appellant carries on the business of manufacturing inter alia Tata Mercedes Benz trucks and buses, chassis, spare parts and accessories thereof at Jamshedpur in the State of Bihar. These are sold to the Government of India, the State Transport Corporations, Commercial and Industrial undertakings and other persons. These appeals relate to the assessments made y the Assistant Commissioner of Commercial Taxes, hereinafter called the "Assistant Commissioner", with regard to the assessment periods April 1, 1964 to March 31, 1965 and April 1, 1965 to March 31, 1966. As the points are common to both the appeals we shall deal with the facts relating to the second period, namely, April 1, 1965 to March 31, 1966.

3. The appellant did not maintain any stockyard in the State of Bihar but in different States stockyards were being maintained since December 1964. This, it is stated, was done for the purpose of more effective distribution of the vehicles particularly among the network of dealers. These stockyards were operated by the appellant s own personnel and the sales of the vehicles, it is claimed, were effected to the dealers as well as to the other users in the different States from the stockyards. The dispute relates only to the assessment made in respect of the vehicles, which moved from the manufacturing plant in Jamshedpur to the stock-yards in different State in the country. The sales tax was duly paid in accordance with the respective State laws on the sales effected from the stockyards there.

4. The Assistant commissioner has levied tax under the Act on all the vehicles, which move to the stockyards in States other than Bihar from Jamshedpur. Tax amounting to Rs. 173 lakhs was levied on April 1, 1966 for the period April 1, 1965 to September 30, 1965. The appellant moved the Patna High Court under Article 226 of the Constitution in April 1966 challenging the order of assessment but the petition was dismissed in limine in April 1966. This Court was thereafter approached against the order of the High Court and special leave to appeal was granted. The appeal was finally allowed in February 1967 and the High Court was directed to entertain and decide the petition on merits. In November 1967 an agreed order was made by which the previous order of assessment was set aside and fresh assessment was to be made in accordance with law. On January 24, 1968 the appellant addressed a detailed communication giving the entire procedure which was being followed in the matter of sales of motor vehicles sent to different States from the works at Jamshedpur. It appears that the Assistant Commissioner paid a personal visit to the head office of the appellant at Bombay and relevant records were shown to him there or later on according to his requisitions. On March 13, 1968 he made the assessment order in which he created a demand for Rs. 2,79,13,599.32 by way of Sales Tax under the provisions of the Act on the vehicles which had moved from Jamshedpur to the stockyard in the various States and had been disposed of from there. The appellant filed petitions under Article 226 f the Constitution challenging the above order as also the assessment on similar lines for the period April 1, 1964 to March 31, 1965. The petitions were dismissed by a Division Bench of the High Court.

5. The controversy throughout has centered on the question whether the sales subjected to tax were of the nature which were covered by the provisions of the Act or whether those sales took place in the different States where the stockyards were situate and from where they were disposed of. Sections 3 and 4 of the Act may be read in this connection.

"3. A sale or purchase of goods shall be deemed