Case: State Of Bihar &amp; Anr Vs. Tata Engineering &amp; Locomotive Co. Ltd

connected with the one immediately preceding it. The principle thus admits of no doubt, according to the decisions of this Court, that the sales to be exigible to tax under the Act (Central Sales Tax Act, 1956) must be shown to have occasioned the movement of the goods or articles from one State to another. The movement must be the result of a covenant or incident of the contract of sale."13. If we apply the principles enunciated by this Court in the decisions referred to above to the facts of this case, it is obvious that the sales with which we are concerned in this case are sales in the course of inter-State trade. The dealers were required to move the trucks, bus chassis and other spare parts purchased by them from the State of Bihar to places outside Bihar. They are so required by the terms of the contracts entered into by them with the assessee. They would have committed breach of their contracts and incurred the penalty prescribed in their dealership agreements, if they had failed to abide by the term requiring them to move the goods outside the State of Bihar.14. The decided cases establish that sales will be considered as sales in the course of export or import or sales in the course of inter-State trade and commerce under the following circumstances:(1) When goods which are in export or import stream are sold;(2) When the contract of sale or law under which goods are sold require those goods to be exported or imported to a foreign country or from a foreign country as the case may be or are required to be transported to a State other than the State in which the delivery of goods takes place; and(3) Where as a necessary incidence of the contract of sale goods sold are required to be exported or imported or transported out of the State in which the delivery of goods takes place.15. But Mr. A. K. Sen, learned Counsel for the State of Bihar contended that this Court has taken a different view of the law in Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras, (1970) 25 STC 528 (SC). According to him the ratio of that decision is that whenever goods are delivered in a State in pursuance of a contract of sale, the sale in question becomes exigible to tax in the State in which the goods are delivered unless they are taken out of the State for purposes of consumption and not resale, or the same is taken out of the State in pursuance of an already existing agreement to resell in the State to which it is taken. The decision in Coffee Boards case, (1970) 25 STC 528 (SC) (supra) does not, in our opinion, afford any basis for these contentions.16. We have earlier noticed that this Court in a series of decisions has pronounced in unambiguous terms that where under the terms of a contract of sale, the buyer is required to remove the goods from the State in which he purchased those goods to another State and when the goods are so moved, the sale in question must be considered as a sale in the course of inter-State trade or commerce. This is a well-established position in law. In the Coffee Boards case, (1970) 25 STC 528 (SC) this Court did not deviate from this position nor could it deviate as the earlier decisions were binding on it. Further in the course of his judgment, the learned Chief Justice who spoke for the Court referred with approval to the earlier decisions of this Court where distinction between the sales in the course of inter-State trade or commerce and sales for the purpose of inter-State trade and commerce were explained. On the basis of the facts in that case, his Lordship came to the conclusion that the export of the coffee in question was not integrated with the sales with which the Court was concerned and that there was no direct bond between the export and the sales. In the course of his judgment his Lordship observed:"Here there are two independent sales involved in the export programme. The first is a sale between the Coffee Board as seller to the export promoter. Then there is the sale by the export promoter to a foreign buyer. Of the latter sale, the Coffee Board does not have any inkling when the first sale takes place. The Coffee Boards sale is not in any way related to the second sale. Therefore, the first sale has no connection with the second sale which is in the course of export, that is to say, movement of goods between an exporter and an importer."17. This finding clearly brings out the distinction between the facts of the Coffee Boards case, (1970) 25 STC 528 (SC) (supra) and the facts of the cases wherein this Court held that the sales in question were sales in the course of export or import. In the Coffee Boards case, (1970) 25 STC 528 (SC:) this Court found that what was insisted on by the Coffee Board was that the coffee set apart for the purpose of the export must be exported it was not incumbent for the purchasers at the auction to export that coffee themselves; they may do it themselves or they may sell it to somebody who may export it outside India. On that basis, this Court came to the conclusion that the sales effected by the Coffee Board are not sales in the course of export, they are only sales for the purpose of export. The ratio of that decision does not bear on the acts before us. Herein, under the terms of the contracts of sale, the purchasers were required to remove the goods from the State of Bihar to other States. Hence the sales with which we are concerned in this case must be held to be sales in the course of inter-State trade or commerce.

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

Explanation:
0[ds]17. This finding clearly brings out the distinction between the facts of the Coffee Boards case, (1970) 25 STC 528 (SC) (supra) and the facts of the cases wherein this Court held that the sales in question were sales in the course of export or import. In the Coffee Boards case, (1970) 25 STC 528 (SC:) this Court found that what was insisted on by the Coffee Board was that the coffee set apart for the purpose of the export must be exported it was not incumbent for the purchasers at the auction to export that coffee themselves; they may do it themselves or they may sell it to somebody who may export it outside India. On that basis, this Court came to the conclusion that the sales effected by the Coffee Board are not sales in the course of export, they are only sales for the purpose of export. The ratio of that decision does not bear on the acts before us. Herein, under the terms of the contracts of sale, the purchasers were required to remove the goods from the State of Bihar to other States. Hence the sales with which we are concerned in this case must be held to be sales in the course of inter-State trade or commerce.