1979 Supreme(Del) 164

IN THE HIGH COURT OF DELHI AT NEW DELHI
Prakash Narain, S.B. Wad, JJ.
ARJAN DASS GUPTA & BROS.
Versus
COMMISSIONER OF SALES TAX, DELHI ADMINISTRATION, VIKASH BHAWAN, NEW DELHI
Sales Tax Reference No. 18 of 1974
Decided On: Decided On : 01-08-1979

The termination of the movement of goods, for the purpose of determining whether a sale is an inter-State sale under section 3(b) of the Central Sales Tax Act, takes place when the goods are landed in the importing State.

Headnote:

INTER-STATE SALE - SALE OF COAL - TRANSFER OF DOCUMENTS OF TITLE - MOVEMENT OF GOODS - TERMINATION OF MOVEMENT - LANDING OF GOODS IN IMPORTING STATE - NOTIFICATION SPECIFYING POINT OF TAXABILITY - INCLUSION OF FREIGHT CHARGES IN SALE PRICE - INTERPRETATION OF RELEVANT PROVISIONS OF CENTRAL SALES TAX ACT AND BENGAL FINANCE (SALES TAX) ACT - KEY LEGAL PRINCIPLES.

Fact of the Case:

The dealer, M/s. Arjan Dass Gupta & Bros., was engaged in the business of selling coal, imported from Bihar/Bengal, to retailers in the Union Territory of Delhi. During the assessment year 1964-65, the procurement of coal from collieries outside Delhi and its sale in Delhi was regulated by the Delhi Coal Control Order, 1963, issued under the Essential Commodities Act, 1955. A notification was issued on 18th January, 1963, by the Delhi Administration under section 5-A of the Bengal Finance (Sales Tax) Act, 1941, specifying the point of taxability for coal sales.

Finding of the Court:

The court held that the sales in question were intra-State sales within Delhi, liable to sales tax under section 2(g) of the Bengal Finance (Sales Tax) Act, 1941, and not inter-State sales falling under section 3(b) of the Central Sales Tax Act, 1956. The court interpreted the relevant provisions of the Central Act, the local Act, and the special provisions of the Delhi Coal Control Order and the notification to conclude that where the documents of title are transferred after coal has landed in Delhi, all sales thereafter are intra-State sales within Delhi.

Issues: 1. Whether the sales of coal and coke made to various coal retailers of the Union Territory of Delhi by the dealer by endorsing the railway receipts in their favour while the goods were in movement constitute single transaction of inter-State sales falling within the purview of section 3(b) read with explanation 1 of the Central Sales Tax Act, 1956, or their are two sales (i) one between the colliery owners and the dealer falling under clause (a) of section 3 of the Central Act and the other between the dealer and retailers in Delhi? 2. Whether, on the facts and in the circumstances of the case, the second sale of coal by the dealer by endorsement of the railway receipts to the retailers in Delhi is subsequent inter-State sale falling under clause (b) of section 3 of the Central Act or inter-State sale falling under clause (g) of section 2 of the Act? 3. Whether, on the facts and in the circumstances of the case, the subsequent inter-State sale of coal is exempt from the levy of sales tax under sub-section (2) of section 6 of the Central Act or exigible to tax under the Central Act? 4. Whether, on the facts and in the circumstances of the case, the sales tax authorities of Delhi have jurisdiction and competence to levy tax under the Central Act on the subsequent inter-State sale of coal made by the dealer by endorsement of the railway receipts to the retailers? 5. Whether, on the facts and in the circumstances of the case, the tax levied under the Act treating the subsequent sales of coal by the dealer, as transactions of inter-State can be deemed to have been levied under the Central Act if the second sales by the dealer are held to be subsequent sales covered by clause (b) of section 3 and held to be taxable under section 6 of the Central Act? 6. Whether, in the circumstances of the case, the freight charges paid to the railway authorities by the coal retailers in whose favour the railway receipts were endorsed are liable to be included in the sale price and turnover of the appellant-firm in terms of the definitions as provided under sections 2(h) and 2(i) of the Bengal Finance (Sales Tax) Act, 1941, as in force in the Union Territory of Delhi?

Ratio Decidendi: 1. The court interpreted section 3(b) of the Central Sales Tax Act and held that the termination of the journey of the goods, as contemplated by the said sub-section, takes place when the goods are landed in the importing State. 2. The court interpreted section 4(2) of the Central Sales Tax Act and held that a sale or purchase of goods shall be deemed to take place inside a State if the goods are physically within the State. 3. The court interpreted the notification dated 18th January, 1963, issued by the Delhi Administration, and held that the physical presence of the goods in the Union Territory of Delhi at the time of the sale is the decisive consideration in the matter of the tax liability. 4. The court interpreted section 2(h) of the Bengal Finance (Sales Tax) Act and held that freight charges paid by the coal retailers are liable to be included in the sale price and turnover of the dealer unless there is evidence that the parties intended otherwise.

Final Decision: 1. The sales in question do not fall under section 3(b) read with explanation 1 of the Central Sales Tax Act, 1956. 2. The sales in question are governed by section 2(g) of the Bengal Finance (Sales Tax) Act of 1941 and not by section 3(b) of the Central Sales Tax Act. The sales in question are intra-State sales. 3. In the light of the analysis of the relevant provisions, the answer to question No. (iii) is in the negative. 4. In view of our interpretation, the answer to question No. (iv) is in the negative. 5. In view of our interpretation, the answer is in the negative. 6. Freight charges paid by the coal retailers are liable to be included in the sale price and turnover of the dealer.