Case: State of Orissa Vs. Messrs Johrimal Gajanand

was not impossible, it would not amount to any violation of the declarations by the assessee. We agree with the contention raised on behalf of the assessee that the proviso cannot be applied to a case of this type. In our opinion, the Tribunal came to the correct conclusion in the matter." 5. We are of the view that the High Court fell into patent error in holding that the sales in dispute were made by the assessee within the State of Orissa. It is not disputed that the said sales were in the course of inter-State trade. If the goods were to remain within the State of Orissa the sales could not be in the Course of inter-State trade. To make a sale in the course of inter-State trade, it is necessary that the contract must envisage the completion of the sale as well as the movement of goods to the other State in the course of inter-State trade. The very fact that the sales in dispute were the sales in the course of inter-State trade, they could not be the sales within the State in terms of Section 2(g) of the Act. The Act provides for a single point levy and the tax is payable at one point or the other. When the assessee purchased the goods free of tax by giving an undertaking that the goods would be resold within the State of Orissa and subsequently violated the undertaking by selling the goods in the course of inter-State trade and commerce, the provision to Section 5(2)(A)(a)(ii) of the Act is directly attracted and the assessee is liable to pay tax. A sale cannot be inside Orissa and at the same time in the course of inter-State trade and commerce. In order that a sale or purchase might be inter-State, it is essential that must be transport of goods from one State to another under the contract of sale or purchase. In Bengal Immunity Co. Ltd. v. State of Bihar occur the following observations which are apposite "A sale could be said to be in the course of inter-State trade only in 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." * It is the admitted case of the assessee that the sales in question were the sales in the course of inter-State trade and if that is the position then the question of the same sales being the sales within the State did not arise 6. We have, today, pronounced judgment in Industrial Minerals & Metals v. Sales Tax Officer, wherein we have held that a sale in the course of the export of goods out of the territory of India cannot be a sale at the same time within the State of Orissa. On the same principles, a sale in the course of inter-State trade and commerce cannot be a sale within the State of Orissa 7. There is, thus, patent violation of the undertaking given by the assessee. This Court in Himatsingka Timber Co. Ltd. v. State of Orissa dealing with Section 5(2)(A)(a)(ii) of the Act held as under "The tax was always leviable on the first sale and it would have been so levied but for the certificate which was furnished by the company when making purchases from the local dealers. The certificate was that the sleepers and timber were for resale in Orissa and when that condition was not fulfilled, the tax became payable even under Section 5(2)(A)(a)(ii) before the 1951 amendment." * 8. In Endupuri Narasimham & Son v. State of Orissa, certain sales to the petitioner therein were not include in the taxable turnover of the seller by reason of the registration certificate which the petitioner had obtained on a declaration that the goods were to be resold in Orissa. In violation of the declaration the petitioner sold the goods to dealers outside the State and he was taxed under Section 5(2) (A)(a)(ii) of the Act. This Court held that the imposition of the tax was not on the sales by the petitioner to person outside the State but on the purchases by him inside the State for which he gave an undertaking and violated the same by not selling the goods within the State of Orissa 9. Even otherwise, the High Court was not justified in holding that the onus for proving that the goods at the time of the contract were not within the State of Orissa was on the sales tax authority. The assessee on purchase of the goods became liable to pay the tax but he did not do so because it was a sale from a registered dealer to a registered dealer. The assessee saved the tax and postponed the event by giving an undertaking that he would sell the goods within the State. True to the undertaking the onus to show that the goods were actually sold within the State of Orissa was on the assessee. In any case, a contract of sale by which the goods are sold and are to be transported from one State to another cannot be made a lever for the argument that though the sale is in the course of inter-State trade and commerce but nevertheless it is a sale within the State of Orissa under Section 2(g) of the Act10. Our answer to the question referred, therefore, on the facts and in the circumstances of this case, is that the Member, Sales Tax Tribunal, was not correct in holding that even the sales in the course of inter-State trade and commerce can be sales inside the State if the goods were inside the State of Orissa and for coming to that conclusion, the Tribunal wrongly and illegally relied upon the definition of sale under Section 2(g) of the Act including the explanation therein

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

Explanation:
1[ds]5. We are of the view that the High Court fell into patent error in holding that the sales in dispute were made by the assessee within the State of Orissa. It is not disputed that the said sales were in the course oftrade. If the goods were to remain within the State of Orissa the sales could not be in the Course oftrade. To make a sale in the course oftrade, it is necessary that the contract must envisage the completion of the sale as well as the movement of goods to the other State in the course oftrade. The very fact that the sales in dispute were the sales in the course oftrade, they could not be the sales within the State in terms of Section 2(g) of the Act. The Act provides for a single point levy and the tax is payable at one point or the other. When the assessee purchased the goods free of tax by giving an undertaking that the goods would be resold within the State of Orissa and subsequently violated the undertaking by selling the goods in the course oftrade and commerce, the provision to Section 5(2)(A)(a)(ii) of the Act is directly attracted and the assessee is liable to pay tax. A sale cannot be inside Orissa and at the same time in the course oftrade and commerce. In order that a sale or purchase might beit is essential that must be transport of goods from one State to another under the contract of sale or purchase. In Bengal Immunity Co. Ltd. v. State of Bihar occur the following observations which areEven otherwise, the High Court was not justified in holding that the onus for proving that the goods at the time of the contract were not within the State of Orissa was on the sales tax authority. The assessee on purchase of the goods became liable to pay the tax but he did not do so because it was a sale from a registered dealer to a registered dealer. The assessee saved the tax and postponed the event by giving an undertaking that he would sell the goods within the State. True to the undertaking the onus to show that the goods were actually sold within the State of Orissa was on the assessee. In any case, a contract of sale by which the goods are sold and are to be transported from one State to another cannot be made a lever for the argument that though the sale is in the course oftrade and commerce but nevertheless it is a sale within the State of Orissa under Section 2(g) of the Act10. Our answer to the question referred, therefore, on the facts and in the circumstances of this case, is that the Member, Sales Tax Tribunal, was not correct in holding that even the sales in the course oftrade and commerce can be sales inside the State if the goods were inside the State of Orissa and for coming to that conclusion, the Tribunal wrongly and illegally relied upon the definition of sale under Section 2(g) of the Act including the explanation therein