The situs of a sale for the purpose of sales tax is determined by the location of the goods at the time the contract of sale is made.

JUDGMENT

R. N. MISRA, J. - These are four references made by the Member, Sales Tax Tribunal, Orissa, under section 24(1) of the Orissa Sales Tax Act at the instance of the Commissioner of Sales Tax. The following question has been referred for opinion of the court :

"Whether, on the facts and in the circumstances of the case, the Member, Sales Tax Tribunal, is correct in holding that even sales in the course of inter-State trade and commerce can be sales inside the State if the goods are inside the State of Orissa, and whether his interpretation of the definition of 'sale' as given in section 2(g) of the Orissa Sales Tax Act, 1947, and the explanation attached to the definition of 'sale' is correct ?"

2. The assessee is a registered dealer under the Orissa Sales Tax Act (hereinafter referred to as the "Act"). For the quarters ending 30th June, 1961 to 31st March, 1962, assessments were completed under section 12(8) of the Act and additional tax together with penalty under that sub-section were demanded from the assessee. The assessing officer was of the view that certain purchases of cereals made free of tax on the strength of the certificate of registration for resale in Orissa were converted into dal and, therefore, the declarations were violated and the assessee became liable under the proviso to section 5(2)(A)(a)(ii) of the Act. The purchase price of those goods so utilised was added to the taxable turnover of the assessee. The assessee had also purchased certain other goods on the basis of declarations furnished by him for resale in Orissa, but subsequently those were sold in the course of inter-State trade. The purchase price of those articles was also added on the same basis to its taxable turnover.

3. The first appeals were dismissed. The Tribunal relying on a decision of this court in the case of Ram Chandra Badrinarayan v. State of Orissa [[1974] 33 S.T.C. 83] (S.J.C. No. 326 of 1969 disposed of on 22nd August, 1972), held that there was no contravention when cereals purchased on the basis of declarations were converted into dal. The demand on that score was thus vacated. In regard to the other contention, the Tribunal held :

"........ In this regard it is contended that the appellate made purchase from the registered dealers as well as unregistered dealers and the charge of contravention cannot succeed unless it is proved that goods purchased from registered dealers only were outside. It is further contended that as there is no proof that sale had taken place outside Orissa, there can be no contravention. The contention as above has enough force. It is for the department to prove the charge of contravention and, therefore, it must be shown that only those goods purchased from registered dealer free of tax had been sold in the course of inter-State trade. The orders of the forums below do not contain any specific finding. The Additional State Representative was asked to scrutinise the accounts and it is reported that in the case of kulthi, black gram and ragi there were purchases both from registered and unregistered dealers and in case of biri dal only there was no purchase from unregistered dealers. In the circumstances, in the case of goods where there were purchases from registered and unregistered dealers, in the absence of any evidence or finding that goods purchased from registered dealers only were sold in the course of inter-State trade, the charge of contravention cannot stand. The charge of contravention can be available in the case of biri dal which only had been purchased from registered dealers and sold in the course of inter-State trade ......"

Dealing with the contention in regard to biri dal, the Tribunal further stated :

"The allegation is that sale were made in the course of inter-State trade. There is no finding as to the situs of sale. The definition of the term 'sale' in the O.S.T. Act contains a proviso explaining when sales would be inside the State of Orissa. It provides that if the goods ar