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1956 Supreme(Ker) 98
Judges : KOSHI,M.S.MENON
The Cochin Coal Company Ltd. - Appellant
Versus
State - Respondent
Case No : O. P. No. 191 of 1956
Decided On : 09/10/1956
Advocates Appeared :
K. P. Abraham; George Kurian; C. Cherian; M. M. Cherian; M. I. Joseph; For Petitioner M. U. Issac; For State
The main legal point established in the judgment is the interpretation and application of Art.286(2) of the Constitution and S.26 of the Travancore-Cochin General Sales Tax Act, 1125, in determining the inter-State character of transactions and the imposition of taxes.
Headnote:
Indian Companies Act - Cochin Coal Company Ltd. - Art.286(2) of the Constitution, S.26 of the Travancore-Cochin General Sales Tax Act, 1125 - The court held that the goods moved from the Candle Island in the Madras State to the ships berthed in the Travancore-Cochin waters of the Port of Cochin in pursuance of an agreement to sell, that the property in the goods passed in the said waters when the goods were delivered trimmed into bunkers and that the transactions have an inter-State character within the meaning of Art.286(2) of the Constitution as interpreted in the Bengal Immunity Case (1955) VI STC 446 and as reproduced in S.26 of the Travancore-Cochin General Sales Tax Act, 1125.
Fact of the Case:
The Cochin Coal Company Ltd. purchased coal from Calcutta through managing agents and sold it to steamers arriving and berthed in Travancore-Cochin State waters of the Cochin Harbour to be stored in the ships' bunkers and exported outside the territorial waters of Travancore-Cochin State for consumption on the High Seas.
Finding of the Court:
The court found that the transactions had an inter-State character within the meaning of Art.286(2) of the Constitution and S.26 of the Travancore-Cochin General Sales Tax Act, 1125.
Issues: The main issue was whether the transactions had an inter-State character and fell within the purview of Art.286(2) of the Constitution and S.26 of the Travancore-Cochin General Sales Tax Act, 1125.
Ratio Decidendi: The court relied on the interpretation of Art.286(2) of the Constitution and S.26 of the Travancore-Cochin General Sales Tax Act, 1125, as provided in the Bengal Immunity Case (1955) VI STC 446. It emphasized the conditions for a sale to be regarded as one in the course of inter-State trade and the ban imposed on the taxing powers of the States under Art.286.
Final Decision: The petition was allowed with costs, and the court held that the Sales Tax Laws Validation Act, 1956, and the Sales Tax Laws Validation Ordinance, 1956, were of no avail as far as the State was concerned.
1. The petitioner is the Cochin Coal Company Ltd., a private company incorporated under the Indian Companies Act, 1913, and having its Registered Office at Fort Cochin in the Madras State. The activities of the company in so far as they relate to the controversy before us are summed up as follows in Para.4 and 6 of the affidavit filed in support of the petition:
"4. The petitioner company purchases coal from Calcutta through Messrs. Macheill and Barry Limited Calcutta who are the Managing Agents for various coal mining companies. The Coal Commissioner for India with his office in Calcutta allots quantities of coal for purchase by the Petitioner Company. The coal so purchased is taken to Cochin by ships and stacked at the Candle Island in Madras State.
6. The subject matter of the petition accompanying relates to sales of coal to steamers arriving and berthed in Travancore-Cochin State waters of the Cochin Harbour to be stored in the ships' bunkers and exported outside the territorial waters of Travancore-Cochin State for consumption on the High Seas."
and the course of dealing will be clear from the following extract from Para.7 to 10 of the said affidavit:
7. These steamers have their respective teamer Agents. Whenever any coal is required for any steamer the Agent for the steamer places an order with the petitioner company for sale to the steamer of a specified quantity of coal.
8. When orders are accepted by the Petitioner Company at Fort Cochin the Transporting Contractor is given a delivery order to the Company's stores at Candle Island. The Steamer Agents also hand over to the Contractor shipping bill and export permit.
9. On the strength of the delivery order and other records the Contractor takes delivery of the quantity authorised from the stores and delivers the same trimmed into the ship's bunker getting a receipt therefor from ship's Officers.
10. Payments for goods so sold to the steamers is received by the Petitioner company at their office in Fort Cochin."
2. Ext. P1 is the original of an order dated 19.2.1952 placed by the Malabar Steamship Co., Ltd., Mattancherry, Travancore-Cochin.
"S.S. Janaki - bunkering coal.
We confirm our telephone conversation of this morning when we requested you to supply the above ship 30 tons of bunker coal and we trust you would arrange for the supply accordingly. We are passing the necessary papers and will be sent to you before today evening. Your bill for cost may be sent to us for payment as usual."
and Exts. P2 and P3 are specimen forms of the Shipping Bill and the Application to Export.
3. Ext. P9 is a letter from Messrs. William Goodacre & Sons, Limited, Alleppey, Travancore-Cochin, dated 12.7.1951.
"S.S. ' Tobata Maru'.
The above vessel is arriving Cochin on the 24th instant with 5000 Tons rice for discharge. Her detention at Cochin will be about 3 days.
She requires 500 Tons bunker coal and we shall be glad to be advised if you would undertake to replenish the vessel with this quantity if so at what rate per ton. On hearing from you we shall place the order with
you."
4. Apparently the Cochin Coal Company Ltd., replied that only 200 tons could be supplied. The next letter is Ext. P10 dated 23.8.1951;
"I have to thank your letter of 21st instant and I am very much obliged to you indeed for reserving 200 tons bunker Coal for S.S. 'Tobata Maru'. Your assistance is very much appreciated."
and Ext. P11 dated 25.7.1951 and Ext. P12 dated 27.7.1951 are the two letters which followed Ext. P10; Ext. P11.
"S.S. Tobata Maru."
The above vessel arrived here yesterday and is anchored in the stream awaiting wharf berth. We shall be glad if you will please arrange to supply 200 tons bunker coal to this vessel, at your early convenience. Shipping Bill duly passed at the Custom, will be sent to you as early as possible.
Ext. P12.
"S.S. Tobata Maru."
With reference to our letter of 25th instant, we send you herewith duplicate and triplicate copies of Shipping Bill No. 964 duly passed by the Customs, cov
