Case: State of Tamil Nadu Vs. Cement Distributors Private Limited &amp; Others

2. The respondent Cement Distributors Private Limited are the agents of the State Trading Corporation. Under the Cement Control Order all manufacturers are required to sell Cement to State Trading Corporation. On 22 November, 1961. the Regional Cement Officer of the State Trading Corporation in Tamil Nadu authorised the respondent to sell the quantity of Cement mentioned in the authorisation note of that date to persons directed by the Regional Cement Officer, State Trading Corporation, Calcutta. The authorisation was in favour of the respondent. The factory which was to supply cement was also mentioned in the note as Dalmiapuram factory. The authorisation further said that 9,000 metric tons were allotted for the fourth period in 1961 for distribution to Calcutta area as directed by the Regional Cement Officer, State Trading Corporation, Calcutta.3. Onthere was another authorisation issued by the Regional Cement Officer at Calcutta. The note mentioned the respondent Cement Distributors as suppliers. The note said that the authorisation was in favour of the Executive Engineer. Howrah Division Construction Board, 94, Chittaranjan Avenue, Calcutta. The quantity allotted. was 230 metric tons. The name of the factory to supply cement was Dalmiapuram. Delivery wasJetty docks. The price was the ruling price on the date of despatch from the

Court's reasoning:
8. In the present case, the goods are despatched by the respondent to themselves at Calcutta according to the directions of the state Trading Corporation. This was for Consumption in Calcutta area as will appear from the authorisation dated 4 November, 1961. The other authorisation letter dated 22 November 1961 was issued, after the arrival of the goods, by the Regional Cement Officer, Calcutta authorising the respondent to sell cement. It is apparent that there was no movement of goods by the respondent company as a result of a contract of sale between the respondent and the buyer at Calcutta. The shipment was made by the respondent company without any reference to any buyer. The movement of goods from Madras to Calcutta did not take place as a result of any contract of sale, but in pursuance of instruction contained in authorisation for transfer of stocks from Madras to Calcutta. The transactions were notsales liable to tax under the Central Sales Tax Act. The movement of goods from one State to another without any of the element of "sale" within the meaning of the Central Act cannot be subject to tax. The shipment was movement of stocks of cement belonging to the State Trading Corporation from one place to another. There was shortage of supply of cement at Calcutta. The State Trading Corporation moved stocks from Madras to Calcutta. The area of need and the availability of Stocks of cement were known to the State Trading Corporation. The transactions could not be subjected to Central Sales Tax.