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1960 Supreme(AP) 266
Andhra Pradesh High Court
Judges : CHANDRASEKHARA SASTRI, P.CHANDRA REDDY
Singareni Collieries Co.Ltd. - Appellant
Versus
State OF A.P. - Respondent
Decided On : 11-15-60
In order to constitute inter-State trade or commerce, it is not sufficient if there is a sale and transportation of goods across the States frontiers. There should a related connection between sale and the movement of goods. In other words, it should be stipulated between the parties that deliveries should be outside the State.
Headnote:
CONSTITUTIONAL LAW - ARTICLE 286 - INTER-STATE TRADE OR COMMERCE - SALE OF COAL - DELIVERY OUTSIDE THE STATE - WHETHER SALE IN THE COURSE OF INTER-STATE TRADE OR COMMERCE - EXEMPTION FROM SALES TAX - EXPLANATION TO ARTICLE 286 (1) (A) - WHETHER APPLICABLE - CENTRAL SALES TAX ACT, 1956, SEC. 3 - INTERPRETATION.
Fact of the Case:
The petitioners, Messrs. Singareni Collieries, were engaged in the business of coal at Singareni Yellandu etc. now situate in the State of Andhra Pradesh, having their head office at Khairatabad, Hyderabad. For the assessment year 1956-57, they submitted a return showing a gross turnover of Rs. 3,87,03,998-2-2 and a net turnover of Rs. 2,08,38,533-5-4 claiming exemption of a turnover of Rs. 1,78,65,464-12-10 on the ground that the same represents inter-state sales falling within the words of Article 286 of the Constitution.
Finding of the Court:
The Court held that the transactions in question did not constitute an inter-state trade or commerce so as to claim the exemption granted by Article 286 of the Constitution and were, therefore amenable to sales tax.
Issues: 1. Whether the sales in question constitute an inter-state trade or commerce so as to claim the exemption granted by Article 286 of the Constitution? 2. Whether the Explanation to Article 286 (1) (a) of the Constitution is applicable to the transactions in question? 3. Whether the sales subsequent to 5-1-1957, when the Central Sales Tax Act 1956 (74 of 1956) was passed, are subject to tax?
Ratio Decidendi: 1. In order to constitute inter-State trade or commerce, it is not sufficient if there is a sale and transportation of goods across the States frontiers. There should a related connection between sale and the movement of goods. In other words, it should be stipulated between the parties that deliveries should be outside the State. 2. The Explanation to Article 286 (1) (a) of the Constitution is not applicable to the transactions in question as the delivery of goods outside the State was not a direct result of the sale. 3. The sales subsequent to 5-1-1957 are subject to tax as they are not covered by the ban created by the Explanation and are not governed by Sec. 3 of the Central Sales Tax Act, 1956.
Final Decision: The revision petition was dismissed with costs.
( 2 ) THE facts of the case are susceptible of a concise statement. The Petitioners are Messrs. Singareni Collieries carrying on business in coal at Singareni Yellandu etc. now situate in the State of Andhra Pradesh, having their head office at Khairatabad, Hyderabad. For the assessment year 1956-57, they submitted a return showing a gross turnover of Rs. 3,87,03,998-2-2 and a net turnover of Rs. 2,08,38,533-5-4 claiming exemption of a turnover of Rs. 1,78,65,464-12-10 on the ground that the same represents inter-state sales falling within the words of Article 286 of the Constitution.
( 3 ) THE proper Commercial Tax Officer disallowed the claim for deduction holding that the transaction in question constituted inter-state transaction.
( 4 ) THE assessee carried the matter in appeal to the Deputy Commissioner, who found that out of the turnover of Rs. 1,78,65,464-12-10 which was sought to be brought under Art. 286 of the Constitution, sales amounting to Rs. 23,46,527-6-5 related to consumers in the Andhra area of the State during the period from 1-11-1956 to 31-3-1957 and as such they could not be regarded as inter-state sales, since for the purpose of Art. 286 the entire State of Andhra Pradesh was one unit. This was also conceded by the assessee before the Deputy Commissioner. As regards the rest of the turnover, i. e. , Rs. 1,55,18,937-6-5, relating to sale made to parties outside the State, he held that they were local sales and were not governed by Article286. In the result he dismissed the appeal.
( 5 ) THE further appeal taken by the assessee to the Sales Tax Apellate Tribunal was unsuccessful. It is to revise this order of the Tribunal that this petition is presented.
( 6 ) THE question that calls for determination is whether the turnover in dispute is protected by the ban imposed by Article286 of the Constitution. For the relevant period, it is the Hyderabad General Sales Tax Act that is applicable to this case, as it was then in force and the Andhra Pradesh General Sales Tax Act came into operation only in 1957.
( 7 ) IN tackling this problem, it is to be borne in mind that coal being a controlled commodity, the, owners of collieries are not at liberty to enter into contracts of sale with any party they liked or to fix their own price. The price for the or to fix their own price. The prices for the various catagories of coal to be sold are fixed by the notification issued by the Ministry of Works New Delhi. The collieries distributed coal as per the allotments made by the Controlled to various persons. Pursuant to these allotments, orders are placed with the petitioners for the coal. The collieries then call upon the allottee to remit the price in advance to give the despatch instructions. After the receipt of the price and the instructions, the Head Office at Hyderabad issues the sale note containing the conditions of the contract of sale between the parties and then instruct the Collieries to despatch the goods to places indicated by the allottees by post. The consignee in every case is the allottee, the owners of the Collieries being the consignor. The price quoted is F. O. R. Collieries and the goods are to be booked Freight to Pay as per railway receipts weighment. The goods were to be booked from the Collieries at Owners risk, unless expressly asked for by the consumer to be booked at Railway Risk. According to the conditions of sale, the sellers were not resposible for non-delivery or late-delivery etc. , and that all duties, charges, cesses etc. are to be paid by the buyers. Out of the total turnover of Rs. 1,55,18,937-6-5, sales for Rs. 97,00,757-6-11 related to supplies to Governmental Agencies llikerailways and other insti
