Case: Singareni Collieries Co. Ltd Vs. State Of Andhra Pradesh And Others

is immaterial that property in the goods has under the general law relating to sale of goods passed in another State in which the allottee resided or carried on business. Delivery of coal to the Railway Administration may amount to delivery to the allottee for the purpose of the general law relating to sale of goods, but thereby coal cannot be said to be "actually delivered" within the meaning of the Explanation to Art. 286 (1) (a). It is also true that under the terms of the sale- note under which coal was despatched on terms F. O. R. Singareni the Company was not responsible for loss or damage to the consignment after it was loaded in the wagons, that may indicate that the Company had no property in the goods after it was in transit. But determination of the State in which sale shall be deemed to have taken place is artificially determined not by terms of the contract of sale, nor by the legal concept of passing of passing in the goods sold by the delivery for the purpose of consumption. (sic) As observed by Das Ag. C. J. in the Bengal Immunity Companys case, 1955-2 SCR 603 : ((S) AIR 1955 SC 661 )."The shifting of situs of a sale or purchase from its actual situs under the general law to a fictional situs under the Explanation takes the sale or purchase out of the taxing power of all States other than the State where the situs is fictionally fixed." Sales-tax under the Hyderabad General Sales Tax Act on transactions of coal delivered to the Railway or other carrier for carriage to places outside the taxing State and for delivery for consumption therein is therefore not leviable to be by virtue of the Explanation to Art. 286 (1). 22. Fro the period September 7, 1955 to September 10, 1956, the turnover from sale of coal actually delivered outside the State of Andhra for consumption in those States would also be exempt from liability because the Explanation continued to remain in force till September 10, 1956. The Company would also be entitled to exemption from liability to tax because the State had during that period no power to levy tax on inter-State sales. As pointed out by Venkatarama Ayyar, J., in the Bengal Immunity Companys case, 1955-2 SCR 603 : ((S) AIR 1955 SC 661 )."A sale could be said to begin the course of inter-State trade only if two conditions concur: (1) A sale of goods, and (2) a transport of those goods from one State to another under the contract of sale. Unless both these conditions are satisfied, there can be no sale in the course of inter-State trade." In these transactions relating to supply of coal, which we have assumed are sales, coal was transported in pursuance of the allotment orders to other States. We have also assumed for the purpose of this argument that compliance with allotment orders resulted in a contract of sale. The transactions were unquestionably in the course of inter-State trade. 23. For the period September 11, 1956 to January 4, 1957 Art. 286 (2) stood repealed and there was no power in the State to tax an inter-State sale. For the period between January 5, 1957 and March 31, 1957 the power to tax inter-State sales was governed by the Central Sales Tax, Act, 1956. By the Constitution (Sixth Amendment) Act amending Art 286 (2) and incorporating Entry 92-A in List 1 of the Seventh Schedule read with Art. 269 (3) the power to tax sales in the course of inter-State trade or commerce rested with the Central Government. Sales-tax for the period from January 5, 1957 to March 31, 1957, has not been levied under the Central Sales Tax Act, 1956, and if the transactions by the Company were taxable under that Act, the State of Andhra Pradesh had no power to tax those transactions. As transactions of sale in the course of inter-State trade or commerce within the meaning of S. 3 they could not be taxed under the Hyderabad General Sales Tax Act, 1950. Section 3 of the Central Sales Tax Act, 1956 provides that"a sale x x of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale x x occasions the movement of goods from one State to another or is effected by a transfer of documents of title to the goods during their movement from one State to another". 24. In Tata Iron and Steel Co. Ltd. Bombay v. S. R. Sarkar, 1961-1 SCR 379 : (AIR 1961 SC 65 ), this Court held that Cl. (a) of S 3 covers sales 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. That view was reaffirmed in State Trading Corporation of India Ltd v. State of Mysore, 1963-14 STC 188: (AIR 1963 SC 548 ), and Cement Marketing Company of India v. State of Mysore, 1963-14 STC 175 : (AIR 1963 SC 980 ). 25. Coal in the appeals under review was transported from the colliery of the Company to the consumers outside the taxing State, as a result of the covenant or incident of the contract of sale and therefore the sale must be regarded as an inter-State sale and not liable to be taxed under the Hyderabad General Sales Tax Act. 1950.The High Court was, in our view, in error in holding that the turnover of the Company in which coal was loaded in railway wagons for conveyance to places outside the taxing State was taxable under the Hyderabad General Sales Tax Act. In that view we do not think it necessary to decide whether the Commissioner of Commercial Taxes was right in re-opening the assessments for the years 1954-55 and 1955-56 in the manner he has purported to do 26.

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

Explanation:
1[ds]9. Broadly speaking the scheme of the Colliery Control Order was that no person could acquire or purchase or agree to acquire or purchase any coal from a colliery and no colliery owner could sell or agree to sell or despatch coal from the colliery, except under the authority and in accordance with the conditions prescribed by the Coal Commissioner, and that the person to whom coal was supplied also could not utilise it for a purpose other than the purpose for which it was supplied, nor could he dispose of coal supplied to him. Supply, use and disposal of coal were, therefore, regulated from the stage of production till consumptionThe Coal Commissioner addressed a letter to a colliery authorising it to despatch on the request of the specified consumers coal not exceeding the quantities mentioned during certain months and according to the schedule appended. In the Schedule appended to the letter were set out the names of the concerns to whom coal was to be supplied. Intimation of the despatch instructions was given to the consumers individually Acting upon this intimation, the consumer addressed a letter to the colliery requesting that the quantity of coal allotted may be despatched to him by train and gave instructions regarding booking, the name of the person to whom coal may be consigned, and also about the collection of price of coal suppliedThe colliery then loaded coal in railway wagons making out a sale note mentioning the cost per ton F. O. R. Colliery with "freight to pay" and despatched the same by rail to the consumer at the destination requested. In the "sale note" were set out the name of the buyer, grade and quantity of coal allotted, the terms of sale, cost per ton F. O. R. Colliery, other charges, and particulars of despatch, such as the name of the Railway Station to which the coal should be booked and the name of the consignee. The sale note was subject to conditions of sale, that the colliery shall not be responsible for non-delivery or late delivery of coal or for any loss occasioned in consequence of fire, snow, heat, flood, strikes, lockouts, shortage of wagons, restrictions on booking, accidental losses, etc, that any taxes, export duty, cess or other charges not in force imposed by the Government after the date of the sale note shall be borne by the purchaser: that the colliery reserved the right to demand payment in advance and to have a right of lien on all coal despatched until it was paid for: that the sale note was subject to the quantity allotted by the Deputy Coal Commissioner for buyers outside the State and in the event of the Deputy Coal Commissioner cancelling the whole or any part of the said allotment such cancellation shall be deemed to apply equally to the sale note11. Under the terms of the "sale note" the property in the coal consigned passed, so far as the colliery was concerned, to the allottee-original or substituted-when the goods were loaded into the railway wagons for conveyance, and thereafter all losses and any new taxes imposed were to be borne by the purchaser, the colliery having only a right of lien on coal not paid for. Coal supplied was meant for consumption by the allottee: therefore, when the allottee was outside the State, it was supplied for the purpose of consumption in the State in which the allottee resided or carried on business12. In view of the legislative developments which we will presently notice the period of the three assessment years may be divided into four sub-periods. They are: April 1. 1954 to September 6, 1955; September 7, 1955 to September 10, 1956, September 11, 1956 to January 4, 1957 and January 5, 1957 to March 31. 1957. In making this sub-division we have not taken into account the application of the States Reorganisation Act as a result of which on November 1,1956, the Part B State of Hyderabad ceased to exitence by merger of certain areas including parts of the State of Hyderabad. The effect of the Reorganisation Act had a bearing only on the territorial operation of the constitutional prohibitions under Art. 286Article 286 thus imposed qua sales four bans upon legislative power of the StatesThat State alone in which the sale is deemed to take place has the power to tax the sale, and for this purpose it is immaterial that property in the goods has under the general law relating to sale of goods passed in another State in which the allottee resided or carried on business. Delivery of coal to the Railway Administration may amount to delivery to the allottee for the purpose of the general law relating to sale of goods, but thereby coal cannot be said to be "actually delivered" within the meaning of the Explanation to Art. 286 (1) (a). It is also true that under the terms of the sale- note under which coal was despatched on terms F. O. R. Singareni the Company was not responsible for loss or damage to the consignment after it was loaded in the wagons, that may indicate that the Company had no property in the goods after it was in transit. But determination of the State in which sale shall be deemed to have taken place is artificially determined not by terms of the contract of sale, nor by the legal concept of passing of passing in the goods sold by the delivery for the purpose of consumptionSales-tax under the Hyderabad General Sales Tax Act on transactions of coal delivered to the Railway or other carrier for carriage to places outside the taxing State and for delivery for consumption therein is therefore not leviable to be by virtue of the Explanation to Art. 286 (1)Coal in the appeals under review was transported from the colliery of the Company to the consumers outside the taxing State, as a result of the covenant or incident of the contract of sale and therefore the sale must be regarded as an inter-State sale and not liable to be taxed under the Hyderabad General Sales Tax Act. 1950.The High Court was, in our view, in error in holding that the turnover of the Company in which coal was loaded in railway wagons for conveyance to places outside the taxing State was taxable under the Hyderabad General Sales Tax Act. In that view we do not think it necessary to decide whether the Commissioner of Commercial Taxes was right in re-opening the assessments for the years 1954-55 and 1955-56 in the manner he has purported to do