Case: State Of Mysore Vs. Guduthur Thimmappa &amp; Son, &amp; Anr

completed not within the State, but outside at the places to which the goods were consigned for delivery to the various parties.We are unable to accept this submission. It has been rightly held by the High Court that the common carrier took delivery as agent of the buyer and that delivery was within the State. There is the further circumstance that, during transit, the goods were insured by the buyers at their own cost, and not by the respondents. The buyers thus recognised that they were already the owners of the cotton bales as soon as they were given for transmission to the common carrier. 5. In this connection, a question also rose whether the sales by the respondents to those non-resident parties were sales in he course of inter-State trade. What are the sales in the course of inter-State trade was explained by this Court in Tata Iron and Steel Co., Ltd., Bombay v. S. R. Sarkar,(196l) 1 SCR 379 : (AIR l961 SC 65), where Cls. (a) and (b) of S. 3 of the Central Sales Tax Act, 1956 were interpreted as follows:-"In our view, therefore, within Cl. (b) of S. 3 are included sales in which property in: the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto: Cl. (a) of S. 3 covers sales, other than those included in C1. (b) in which the movement of goods from one State to another is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State." The nature of transactions found by the Tribunal in the cases before us shows that property in the cotton bales sold by the respondents did not pass during the movement of goods from one State to another by transfer of documents of title, and, further, that the movement of goods from the Madras area to places outside the State was not the result of any covenant or incident of the contract of sale. The contract of sale was completely carried through within the Madras area itself, in which area the price was received by the respondents and the cotton bales were delivered to the buyers. The movement of the cotton bales outside the State was by the buyers themselves after property in them had passed to them, so that these sales were not sales in the course of inter-State trade. 6. We now come to the second and the main point which was urged before us by learned counsel for the appellant. The submission of learned counsel was that a buyer, who was not resident within the area to which the Act applied, could not be held to be the last dealer for purposes of R. 4-A (iv) (b) of the Rules. According to him, it is the situs of the seller and the buyer which determines the applicability of this Rule, and not the situs of the sale of cotton itself. We are unable to accept this submission. The language of the Rule is clear that the tax is to be levied from the dealer who buys it in the State and is the last dealer not exempt from taxation. The test laid down thus is as to who buys it in the State and not who is in the State for purposes of buying the cotton. The Mills outside the State were no doubt carrying on their main business of manufacture of yarn or cloth outside the State; but so far as the act of purchase of these cotton bales was concerned, it was carried out by them within the State. It is to be noticed that in the Rule the expression used is "the dealer who buys it in the State and is the last dealer not exempt from taxation". If the intention had been that the location of the buyer himself should be the criterion for imposing tax on him, the language used in the Rule would have been quite different. It could easily have been laid down that the tax will be levied from the dealer in the State who buys it as the last dealer not exempt from taxation. The expression as used in the Rule makes it perfectly clear that the location of the dealer himself is immaterial. The liability to be taxed attaches if the purchase itself by the dealer is within the State. In the case of the sales in question, therefore, the buyers who purchased the cotton bales from the respondents were the last dealers who bought those cotton bales in the State and the single point tax under S. 5 (2) of the Act had to be levied from them and not from the respondents. 7. In this connection, an alternative argument was also raised for the first time by learned counsel for the appellant that those outside buyers could not be held to be dealers carrying on the business of purchase in the State, and if they were not dealers, the purchases by them had to be ignored, so that the last buyers in the State would be the respondents, because their purchases would be the last purchases by dealers made when they acquired these cotton bales subsequently sold by them. This contention was not raised at any earlier stage before the Tribunal or the High Court, and it is, therefore, not open to the appellant to urge it before this Court for the first time. In any case, it is clear that the outside buyers were all mills which were purchasing cotton bales for use in their manufacturing process and such purchases by them would amount to purchases of raw materials for their business. Purchases of this nature have already been held by this Court to constitute the business of purchase by the buyers in State of Andhra Pradesh v. M/s. H. Abdul Bakhi and Bros., AIR l965 SC 531. Consequently, this ground raised has also no force.

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

Explanation:
0[ds]It has been rightly held by the High Court that the common carrier took delivery as agent of the buyer and that delivery was within the State. There is the further circumstance that, during transit, the goods were insured by the buyers at their own cost, and not by the respondents. The buyers thus recognised that they were already the owners of the cotton bales as soon as they were given for transmission to the common carrierThe nature of transactions found by the Tribunal in the cases before us shows that property in the cotton bales sold by the respondents did not pass during the movement of goods from one State to another by transfer of documents of title, and, further, that the movement of goods from the Madras area to places outside the State was not the result of any covenant or incident of the contract of sale. The contract of sale was completely carried through within the Madras area itself, in which area the price was received by the respondents and the cotton bales were delivered to the buyers. The movement of the cotton bales outside the State was by the buyers themselves after property in them had passed to them, so that these sales were not sales in the course of inter-State tradeThe language of the Rule is clear that the tax is to be levied from the dealer who buys it in the State and is the last dealer not exempt from taxation. The test laid down thus is as to who buys it in the State and not who is in the State for purposes of buying the cotton. The Mills outside the State were no doubt carrying on their main business of manufacture of yarn or cloth outside the State; but so far as the act of purchase of these cotton bales was concerned, it was carried out by them within the State. It is to be noticed that in the Rule the expression used is "the dealer who buys it in the State and is the last dealer not exempt from taxation". If the intention had been that the location of the buyer himself should be the criterion for imposing tax on him, the language used in the Rule would have been quite different. It could easily have been laid down that the tax will be levied from the dealer in the State who buys it as the last dealer not exempt from taxation. The expression as used in the Rule makes it perfectly clear that the location of the dealer himself is immaterial. The liability to be taxed attaches if the purchase itself by the dealer is within the State. In the case of the sales in question, therefore, the buyers who purchased the cotton bales from the respondents were the last dealers who bought those cotton bales in the State and the single point tax under S. 5 (2) of the Act had to be levied from them and not from the respondentsThis contention was not raised at any earlier stage before the Tribunal or the High Court, and it is, therefore, not open to the appellant to urge it before this Court for the first time. In any case, it is clear that the outside buyers were all mills which were purchasing cotton bales for use in their manufacturing process and such purchases by them would amount to purchases of raw materials for their business. Purchases of this nature have already been held by this Court to constitute the business of purchase by the buyers in State of Andhra Pradesh v. M/s. H. Abdul Bakhi and Bros., AIR l965 SC 5314. The course of transactions found by the Tribunal, reproduced above, led the Tribunal and the High Court to the finding that the situs of the sales by the respondents to thet parties was in Bellary where the sales were completed and delivery also took placeWe are unable to accept this submission.It has been rightly held by the High Court that the common carrier took delivery as agent of the buyer and that delivery was within the State. There is the further circumstance that, during transit, the goods were insured by the buyers at their own cost, and not by the respondents. The buyers thus recognised that they were already the owners of the cotton bales as soon as they were given for transmission to the common carrierWe are unable to accept this submissionThis contention was not raised at any earlier stage before the Tribunal or the High Court, and it is, therefore, not open to the appellant to urge it before this Court for the first time. In any case, it is clear that the outside buyers were all mills which were purchasing cotton bales for use in their manufacturing process and such purchases by them would amount to purchases of raw materials for their business. Purchases of this nature have already been held by this Court to constitute the business of purchase by the buyers in State of Andhra Pradesh v. M/s. H. Abdul Bakhi and Bros., AIR l965 SC. Consequently, this ground raised has also no force.