Case: Balabhagas Hulaschand Vs. State Of Orissa

sold is effected by a transfer of documents of title to them. Of course, in the first case, the movement of the goods must be from one State to another and in the second, the documents of title must be transferred during such movement".28. In State Trading Corporation of India Ltd. vs. State of Mysore, (1963) 3 S.C.R. 792 at 797-798 this Court observed as follows :-"Since the permits with which we are concerned provided that the supply had to be made from one or other factory situate outside Mysore, the contracts must be deemed to have contained a covenant that the goods would be supplied in Mysore from a place situate outside its borders. A sale under such a contract would clearly be an inter-State sale as defined in section 3(a) of the Central Sales Tax Act."29. Similarly in Tata Engineering & Locomotive Co. Ltd. vs. The Assistant Commissioner of Commercial Taxes & Anr. (1970) 3 S.C.R. 862 at 866, while describing the incidents of an inter-State sale, this Court observed as follows :-"A sale being transfer of property becomes taxable under Section 3(a) if the movement of goods from one State to another is under a covenant or incident of the contract of sale".30. The same view was taken in a later decision of this Court in M/s. Kelvinator of India Ltd. vs. The State of Haryana (1973) 3 S.C.C. 551 at 560 where Khanna, J., speaking for the Court observed as follows :-"It is also plain from the language of section 3(a) of the Act that the movement of goods from one State to another must be under the contract of sale. A movement of goods which takes place independently of a contract of sale would not fall within the ambit of the above clause. Perusal of section 3(a) further makes it manifest that there must be a contract of sale preceding the movement of the goods from one State to another, and the movement of goods should have been caused by and be the result of that contract of sale. If there was no contract of sale preceding the movement of goods, the movement can obviously be not ascribed to a contract of sale nor can it be said that the sale has occasioned the movement of goods from one State to the other".In that case, however, on the facts found by the High Court, this Court held that the sale was not an inter-State sale but an internal sale which took place in Delhi. In that case there was no movement of the goods from one State to another in pursuance of the contract of sale. In other words, the facts of this case clearly fell within Case No. 11 which has been described by us, above.31. To the same effect is the recent decision of this Court in The State of Tamil Nadu vs. The Cement Distributors (P) Ltd. and others, (1975) 4 S.C.C. 30 in which reliance was placed on the earlier decision of this Court in Tata Iron and Steel Co. Ltd. vs. S. R. Sarkar & others (supra).32. In Oil India Ltd. vs. The Superintendent of Taxes and others, (1975) 1 S.C.C. 733 at 736-737 while lucidly describing the incidents of an inter-State sale, Mathew, J., observed as follows :"This Court has held in a number of cases that if the movement of goods from one State to another is the result of a covenant or an incident of the contract of sale, then the sale is an inter-State sale ......."Even though Clause 7 of the supplemental agreement does not expressly provide for movement of the goods, it is clear that the parties envisaged the movement of crude oil in pursuance to the contract from the State of Assam to the State of Bihar. In other words, the movement of crude oil from the State of Assam to the State of Bihar was an incident of the contract of sale. No matter in which State the property in the goods passes, a sale which occasions movement of goods from one State to another is a sale in the course of inter-State trade. The inter-State movement must be the result of a covenant express or implied in the contract of sale or an incident of the contract. It is not necessary that the sale must precede the inter- State movement in order that the sale may be deemed to have occasioned such movement. It is also not necessary for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It would be enough if the movement was in pursuance of and incidental to the contract of sale."33. We might mention here that the case cited above appears to be on all fours with the facts of the present case. In that case also the goods were supplied from Assam to Bihar through the pipelines in Assam to Barauni in Bihar. This Court observed that no matter in which State the property in goods passes the sale undoubtedly occasioned movement of the goods which was sufficient to bring the case within the ambit of Section 3(a) of the Central Sales Tax Act.34. Thus the authorities discussed above by us fully support the principles and the ratio laid down by us. We have already pointed out that even though the sale took place at Calcutta, as rightly founded by the High Court, since the movement of goods preceded the sale in pursuance of the contract of sale which contained a clear stipulation that the goods were to move from Orissa to Calcutta in West Bengal, the movement of goods was occasioned by the sale itself which took place in Calcutta. In these circumstances, therefore, the High Court was legally justified in holding that in all these appeals the cases were clearly covered by the provisions of section 3(a) of the Central Sales Tax Act.

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

Explanation:
0[ds]30. The same view was taken in a later decision of this Court in M/s. Kelvinator of India Ltd. vs. The State of Haryana (1973) 3 S.C.C. 551 at 560 where Khanna, J., speaking for the Court observed as followsis also plain from the language of section 3(a) of the Act that the movement of goods from one State to another must be under the contract of sale. A movement of goods which takes place independently of a contract of sale would not fall within the ambit of the above clause. Perusal of section 3(a) further makes it manifest that there must be a contract of sale preceding the movement of the goods from one State to another, and the movement of goods should have been caused by and be the result of that contract of sale. If there was no contract of sale preceding the movement of goods, the movement can obviously be not ascribed to a contract of sale nor can it be said that the sale has occasioned the movement of goods from one State to the other".In that case, however, on the facts found by the High Court, this Court held that the sale was not ansale but an internal sale which took place in Delhi. In that case there was no movement of the goods from one State to another in pursuance of the contract of sale. In other words, the facts of this case clearly fell within Case No. 11 which has been described by us, above.31. To the same effect is the recent decision of this Court in The State of Tamil Nadu vs. The Cement Distributors (P) Ltd. and others, (1975) 4 S.C.C. 30 in which reliance was placed on the earlier decision of this Court in Tata Iron and Steel Co. Ltd. vs. S. R. Sarkar & others (supra).32. In Oil India Ltd. vs. The Superintendent of Taxes and others, (1975) 1 S.C.C. 733 atwhile lucidly describing the incidents of ansale, Mathew, J., observed as follows :"This Court has held in a number of cases that if the movement of goods from one State to another is the result of a covenant or an incident of the contract of sale, then the sale is ansale ......."Even though Clause 7 of the supplemental agreement does not expressly provide for movement of the goods, it is clear that the parties envisaged the movement of crude oil in pursuance to the contract from the State of Assam to the State of Bihar. In other words, the movement of crude oil from the State of Assam to the State of Bihar was an incident of the contract of sale. No matter in which State the property in the goods passes, a sale which occasions movement of goods from one State to another is a sale in the course ofate movement must be the result of a covenant express or implied in the contract of sale or an incident of the contract. It is not necessary that the sale must precede the interState movement in order that the sale may be deemed to have occasioned such movement. It is also not necessary for a sale to be deemed to have taken place in the course oftrade or commerce, that the covenant regardingmovement must be specified in the contract itself. It would be enough if the movement was in pursuance of and incidental to the contract of sale."33. We might mention here that the case cited above appears to be on all fours with the facts of the present case. In that case also the goods were supplied from Assam to Bihar through the pipelines in Assam to Barauni in Bihar. This Court observed that no matter in which State the property in goods passes the sale undoubtedly occasioned movement of the goods which was sufficient to bring the case within the ambit of Section 3(a) of the Central Sales Tax Act.34. Thus the authorities discussed above by us fully support the principles and the ratio laid down by us. We have already pointed out that even though the sale took place at Calcutta, as rightly founded by the High Court, since the movement of goods preceded the sale in pursuance of the contract of sale which contained a clear stipulation that the goods were to move from Orissa to Calcutta in West Bengal, the movement of goods was occasioned by the sale itself which took place in Calcutta. In these circumstances, therefore, the High Court was legally justified in holding that in all these appeals the cases were clearly covered by the provisions of section 3(a) of the Central Sales Tax Act.