Case: Collector of Commercial Taxes, Cuttack Vs. M/s. Bharat Sabai Grass Limited

such question as was formulated by the learned Judges of the High Court actually arose on the facts found in this case, and he has further submitted that the order calling for the reference and the answer which the High Court ultimately gave are based on a complete misapprehension of the decision in Sales Tax Officer, Pilibhit v. Merrs. Budh Prakash Jai Prakash (A) (supra). 7. Let us first see what were the facts found in this case. The Sales Tax Officer who made the assessment on December 16, 1949, proceeded on the footing that there were completed sales (as distinguished from mere agreements to sell) of bamboo and sabai grass in Orissa, and the respondents in spite of sufficient time having been given to them did not produce any account books or any other evidence to prove that the sales took place elsewhere. No question was raised before the Sales Tax Officer that the transactions on which assessment was sought to be made, were not sales but mere agreements to sell. The same view was again reiterated by the Assistant Collector of Sales Tax, who was the appellate authority and before whom also the contention was that the sales did not take place in Orissa. He repelled the contention and said that there was no evidence to show that the sales did not take place in Orissa. It may be stated here that admittedly the Orient Paper Mill was situated in Orissa and a sale of bamboo and sabai grass to that paper mill was a sale in Orissa. The respondents tried to make out a case that the Orient Paper Mill was a registered dealer, and therefore they were entitled to exemption under R. 27 (2) ; it was pointed out that it was for the respondents to adduce evidence that a portion of their gross turnover represented sales of non-taxable goods and unless and until they did so, the assessing authority was entitled to construe the total turnover as taxable. Even before the Commissioner, Northern Division, Sambalpur, the position taken was that the sales to the Bengal Mills did not take place in Orissa; this plea was met by pointing out that though the respondents were given an opportunity, they failed to produce evidence to show that the sales took place elsewhere.Therefore, it appears to us that on the facts found no such question of law as was formulated by the High Court actually arose for decision in the present case. There was no finding by any of the assessing authorities that a tax was imposed on mere agreements to sell or that the sales of bamboo and sabai grass made by the respondents to different mills in Bengal and Orissa did not involve a transfer of property in goods for cash on deferred payment. 8. The case of Budh Prakash Jai Prakash (A) (supra) dealt with the definition of sale in the Uttar Pradesh Sales Tax Act, XV of 1948, which definition included forward contracts and the point for decision was whether the power to impose tax on the sale of goods under entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935 included the power to impose a tax on forward contracts. In that context the distinction between a sale of goods and an agreement for a sale of goods was pointed out, and the legal position was thus summarised: "The position therefore is that the liability to be assessed to sales tax can arise only if there is a completed sale under which price is paid or is payable and not when there is only agreement to sell, which can only result in a claim for damages; the power conferred under entry 48 to impose tax on the sale of goods can therefore be exercised only when there is a sale under which there is a transfer of property in the goods and not when there is a mere agreement to sell." In the case under our consideration, on the facts found, no question arose of the imposition of a tax on a mere agreement to sell. The definition of sale in the Act, unlike the definition in the Uttar Pradesh Sales Tax Act, 1948, did not purport to tax a mere agreement to sell nor did the second proviso thereto purport to do so. What the second proviso did was to fix the suits of the sale in Orissa when the goods were actually in Orissa at the time the contract of sale was made. This is altogether different from imposing a tax on a mere agreement to sell.It is worthy of note that the assessment in this case relates to a pre-Constitution period and we are not concerned in this case with the vexed question of the effect of the second proviso with reference to transactions in inter-State Commerce referred to in Art. 286 of the Constitution. The proviso has, however, a bearing on the question whether the doctrine of nexus is applicable to Sales Tax Law. That question has been exhaustively dealt with by this Court in Tata Iron and Steel Co. Ltd. v. The State of Bihar (Civil Appeals Nos. 412 and 413 of 1956 decided today): (since reported in (AIR 1958 S C 452) (B) ) with regard to a similar proviso in the Bihar Act. So far as the facts of the present case are concerned,we are clearly of the view that the decision in Budh Prakash Jai Prakash (A)(supra)has no application and the learned Judges of the High Court were in error in thinking that the principle of that decision was attracted to the facts of this case. 9. Therefore, we have come to the conclusion that the reference directed by the Orissa High Court was itself incompetent, because no such question of law as was formulated by that Court arose on the facts of the case and it was quite unnecessary to answer such a question in the present case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In the case under our consideration, on the facts found, no question arose of the imposition of a tax on a mere agreement to sell. The definition of sale in the Act, unlike the definition in the Uttar Pradesh Sales Tax Act, 1948, did not purport to tax a mere agreement to sell nor did the second proviso thereto purport to do so. What the second proviso did was to fix the suits of the sale in Orissa when the goods were actually in Orissa at the time the contract of sale was made. This is altogether different from imposing a tax on a mere agreement to sell.It is worthy of note that the assessment in this case relates to a pre-Constitution period and we are not concerned in this case with the vexed question of the effect of the second proviso with reference to transactions in inter-State Commerce referred to in Art. 286 of the Constitution. The proviso has, however, a bearing on the question whether the doctrine of nexus is applicable to Sales Tax Law. That question has been exhaustively dealt with by this Court in Tata Iron and Steel Co. Ltd. v. The State of Bihar (Civil Appeals Nos. 412 and 413 of 1956 decided today): (since reported in (AIR 1958 S C 452) (B) ) with regard to a similar proviso in the Bihar Act. So far as the facts of the present case are concerned,we are clearly of the view that the decision in Budh Prakash Jai Prakash (A)(supra)has no application and the learned Judges of the High Court were in error in thinking that the principle of that decision was attracted to the facts of this case9. Therefore, we have come to the conclusion that the reference directed by the Orissa High Court was itself incompetent, because no such question of law as was formulated by that Court arose on the facts of the case and it was quite unnecessary to answer such a question in the present caseTherefore, it appears to us that on the facts found no such question of law as was formulated by the High Court actually arose for decision in the present case. There was no finding by any of the assessing authorities that a tax was imposed on mere agreements to sell or that the sales of bamboo and sabai grass made by the respondents to different mills in Bengal and Orissa did not involve a transfer of property in goods for cash on deferred payment.