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PATNA HIGH COURT
Satya Brata Sanyal, J.
D.R.Garg And Company
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 1143 of 1983 ; 1194 of 1983 ; 1411 of 1983 ; 1463 of 1983 ;
Decided On : AUGUST 26, 1985
CENTRAL SALES TAX - Sale of khair billets and forest products - Whether purchase of khair billets and/or forest products from the forest department in the State of Bihar constitute sale within the State of Bihar or in course of inter-State sale, liable to payment of the Central sales tax at the rate of 4 per cent on filing of a declaration in form C.
Fact of the Case:
The petitioners, companies or firms registered under the Central Sales Tax Act, purchased khair billets and/or forest products from the forest department in the State of Bihar. The petitioners claimed that the purchases were made for consumption in their factories outside the State of Bihar and that they were outside the State dealers. The revenue authorities, however, demanded Bihar sales tax on the ground that the sale had concluded within the State of Bihar.
Finding of the Court:
The court held that the sale and purchase of khair billets and forest products in the instant case was in course of inter-State trade and commerce and was completely covered under Sec.3(a) of the Central Sales Tax Act. The court found that the petitioners were not entitled to have any personal volition with respect to the goods and/or right to use it in the State of Bihar. Further, the petitioners did not obtain complete right to the property purchased immediately on purchase of goods in the State of Bihar as they were not entitled to transfer title to the goods purchased to any person in the State where the goods were purchased, but obtained the said right at the destination State, mentioned in transport permit where the goods have moved to the knowledge of the seller, viz., the other State. Therefore, the title and possession of the goods with right of disposal or usurpation arose only in the State where the goods had moved pursuant to the contract of sale and/or as an incident of the said contract. The transaction of sale and purchase came to a close at the destination State, indicated in the permit.
Issues: Whether the purchase of khair billets and/or forest products from the forest department in the State of Bihar constitute sale within the State of Bihar or in course of inter-State sale, liable to payment of the Central sales tax at the rate of 4 per cent on filing of a declaration in form C.
Ratio Decidendi: The court held that the sale and purchase of khair billets and forest products in the instant case was in course of inter-State trade and commerce and was completely covered under Sec.3(a) of the Central Sales Tax Act. The court found that the petitioners were not entitled to have any personal volition with respect to the goods and/or right to use it in the State of Bihar. Further, the petitioners did not obtain complete right to the property purchased immediately on purchase of goods in the State of Bihar as they were not entitled to transfer title to the goods purchased to any person in the State where the goods were purchased, but obtained the said right at the destination State, mentioned in transport permit where the goods have moved to the knowledge of the seller, viz., the other State. Therefore, the title and possession of the goods with right of disposal or usurpation arose only in the State where the goods had moved pursuant to the contract of sale and/or as an incident of the said contract. The transaction of sale and purchase came to a close at the destination State, indicated in the permit.
Final Decision: The court allowed the writ petitions and directed the respondents not to demand and/or realise Bihar sales tax in these kinds of trade and commerce from the writ petitioners. The respondents were also directed to refund or adjust it in accordance with law, if some such sale or purchase is found to have been subjected to State tax and the same have been realised from any one of the petitioners. The State Trading Corporation was directed to refund the security amount of the petitioners if held by them on this account and not otherwise required.
Satyabrata Sanyal, J.
1. In view of the fact that the questions involved in all these four writ petitions are common, they were heard together and are being disposed of by a common judgment.
2. The simple question involved in all these writ petitions whether the purchase of khair billets and/or forest products from the forest department in the State of Bihar constitute sale within the State of Bihar or in course of inter-State sale, liable to payment of the Central sales tax at the rate of 4 per cent on filing of a declaration in form C.
3. The petitioners are either companies or firms registered under the Central Sales Tax Act and carrying on manufacturing business outside the State of Bihar. The petitioners in C.W.J.C. Nos. 1411 and 1463 of 1983 (R) are the manufacturers of khair in their factory at Izatnagar, Bareilly in the State of Uttar Pradesh, and are registered as well under the Uttar Pradesh Sales Tax Act. They have no place of business in the State of Bihar nor do they manufacture any katha within the State of Bihar out of khair billets and/or khair woods purchased by them. It is stated that the said goods are purchased for consumption in their factory at Izatnagar (U.P.). They are outside the State dealers.
4. The petitioners in C.W.J.C. Nos. 1143 and 1194 of 1983 (R) similarly carry on their business of timber goods at their place of business at Rourkela in the State of Orissa. It is said that they are registered under the Orissa Sales Tax Act, as well as registered under the Central Sales Tax Act. They also claim to have no other place of business in the State of Bihar nor do they carry on any business in the said goods within the State of Bihar and similarly outside the State dealers.
5. In all the four writ petitions system and course of business and purchase transaction are same or similar, viz., either by calling tender or by auction. It may be stated here that so far as C.W.J.C. No. 1411 of 1983 (R) is concerned, the sale is by inviting tenders. In C.W.J.C. No. 1463 of 1983 (R), it is partly by tender and partly by auction, whereas, in C.W.J.C. Nos. 1194 and 1143 of 1983 (R), the purchases have been made by auction sale. In C.W.J.C. Nos. 1411 and 1463 of 1983 (R), the contracts of sale have been annexed which inter alia provides that the buyers shall pay sales tax or any other tax and cess as applicable, on the khair billets in Bihar. It further provides that the security deposit shall be liable to be adjusted against any outstanding dues to the Corporation and shall also be liable to be forfeited by the Corporation for breach of any of the terms and conditions of the agreement. It also provides that there should be authorised representative of the successful tenderer to take delivery of the produce which will be marked after the sale is concluded and the property mark of the buyer will have to be registered in advance with the Corporation. Clauses 13 and 14 being relevant for the purpose of these writ petitions are quoted hereunder:
Clause 13: The delivered produce will be transported duly covered by permit issued by the Corporation and routed through check posts prescribed by the Corporation.
Clause 14: Trucks or carts engaged by the buyer for transport of delivered forest produce will be registered with the Corporation.
The payment could be made whether in one lump sum or in instalments and buyer will lift proportionate quantity of produce on such payments. The instalments due can also be realised out of the security deposit. Clause 20 of the agreement provides that:
The delivery order, railway receipt or any other document of title relating to the contract shall not be transferable.
There is another agreement annexed to the writ petition which has been marked annexure 2. One of the clauses of this agreement of sale provides that the buyer has to pay sales tax at the rate of 4 per cent + 1 per cent agriculture market fee. It may be stated here that under the Forest Act, certain Rules have been fra
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