Case: K. G. Khosla &amp; Co Vs. Deputy Commissioner Of Commercial Taxies

goods before the goods have crossed the customs frontiers of India." 9. Section 3 of the Act, which deals with inter-State trade and commerce may also be set out as it employs the same terminology and has been interpreted by this Court. Section 3 reads:"A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase- (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another." It is not necessary to set out the two Explanations to S. 3. 10. It seems to us that the expression "occasions the movement of goods" occurring in S. 3(a) and S. 5(2) must have the same meaning. In Tata Iron and Steel Co. Ltd. Bombay v. S. R. Sarkar,1960-11 STC 655 : (AIR 1961 SC 65 ), Shah, J., speaking for the majority, interpreted S. 3 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 Cl. (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." These observations of Shah, J., were cited with approval by this Court in Cement Marketing Co. of India (Pvt) Ltd. v. State of Mysore, 1963-14 STC 175 : (AIR 1963 SC 980 ). This case, it is true, was not dealing with the Central Sales Tax Act but the Court was dealing with the Central Sales Tax Act but the Court was dealing with a similar question arising under Art. 286 of the Constitution, before its amendment. 11. But the same Bench, in dealing with a case arising under the Act (State Trading Corporation of India Ltd. v. State of Mysore, 1963-14 STC 188: (AIR 1963 SC 548 ) again approved of the observations in Tata Iron and Steel Co. case, 1960-11 STC 655 : (AIR 1961 SC 65 ) Sarkar J., observed thus:"The question then is, did the sales occasion the movement of cement from another State into Mysore within the meaning of the definition? In 1960-11 STC 655 : (AIR 1961 SC 65 ) it was held that a sale occasions the movement of goods from one State to another within S. 3 (a) of the Central Sales Tax Act, when the movement "is the result of a covenant or incident of the contract of sale." That the cement concerned in the disputed sales was actually moved from another State into Mysore is not denied. The respondents only contend that the movement was not the result of a covenant in or an incident of the contract of sale." This Court then, on the facts of the case, found that the movement of cement from another State into Mysore was the result of a covenant in the contract of sale or incident of such contract. This Court did not go into the question as to whether the property had passed before the movement of the goods or not, and this was because according to the decision in 1960-11 STC 655 : (AIR 1961 SC 65 ) it did not matter whether the property passed in one State or the other. Tata Iron and Steel Co. case, 1960-11 STC 655 : (AIR 1961 SC 65 ), was again followed by this Court in Singareni Collieries Co. v. Commissioner of Commercial Taxes, Hyderabad, Civil Appeals Nos. 950-952 of 1963 dated 12-10-1965: (AIR 1966 SC 563 ). 12. The learned counsel for the respondent, Mr. A. Ranganadham Chetty, invited us to hold that the observations of Shah J., in Tata Iron and Steel Co case, 1960-11 STC 655 : (AIR 1961 SC 65 ), were obiter, and to consider the question afresh. We are unable to reopen the question at this stage. Shah, J., was interpreting S. 3 of the Act, and although the Court was principally concerned with the interpretation of S. 3 (b), it was necessary to consider the interpretation of S. 3 (a) in order to arrive at the correct interpretation of S. 3 (b). Further these observations were approved in 1963-14 STC 175 : (AIR 1963 SC 980 ): 1963-14 STC 188: (AIR 1963 SC 548 ) and Civil Appeals Nos. 950-952 of 1963 dated 12-10-1965: (AIR 1966 SC 563 ). In the State Trading Corporation case, 1963-14 STC 188: (AIR 1963 SC 548 ), in so far as the assessment for the assessment year 1957-58 was concerned, this Court applied the principles laid down in Tata Iron and Steel Co. case, 1960-11 STC 655 : (AIR 1961 SC 65 ). Accordingly we hold that the High Court was wrong in holding that before a sale could be said to have occasioned import it is necessary that the sale should have preceded the import. 13. The next question that arises is whether the movement of axle-box bodies from Belgium into Madras was the result of a covenant in the contract of sale or an incident of such contract. It seem to us that it is quite clear from the contract that it was incidental to the contract that the axle-box bodies would be manufactured in Belgium, inspected there and imported into India for the consignee. Movement of goods from Belgium to India was in pursuance of the conditions of the contract between the assessee and the Director-General of Supplies. There was no possibility of these goods being diverted by the assessee for any other purpose. Consequently we hold that the sales took place in the course of import of goods within S. 5(2) of the Act, and are, therefore, exempt from taxation. 14.

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

Explanation:
1[ds]We see no force in this objection. It is common ground that the Madras High Court had at the relevant time consistently taken the view that no application for leave to appeal to Supreme Court lay before the High Court in matters involving revenue. In these circumstances we dispense with the requirement of O. XIII, R. 2 of the Supreme Court Rules, and overrule the objection. The second preliminary objection raised by him was that the assessee should have filed four appeals and not two appeals because there were four revision petitions before the High Court. We see no force in this objection also. Two revisions were filed by the assessee and two by the State in respect of two assessment orders and they were disposed of by one common judgment. The subject-matter of the four revisions were two assessments, one under the Madras General Sales Tax Act and the other under the Central Sales Tax Act. In our opinion, the assessee was quite right in filing two appeals before this CourtIt seem to us that it is quite clear from the contract that it was incidental to the contract that the axle-box bodies would be manufactured in Belgium, inspected there and imported into India for the consignee. Movement of goods from Belgium to India was in pursuance of the conditions of the contract between the assessee and the Director-General of Supplies. There was no possibility of these goods being diverted by the assessee for any other purpose. Consequently we hold that the sales took place in the course of import of goods within S. 5(2) of the Act, and are, therefore, exempt from taxation.