# MANGANESE ORE (INDIA) LTD v. THE REGIONAL ASSISTANT COMMISSIONER OF SALES TAX, ~ JABALPUR •

- **Citation:** [1976] 3 S.C.R. 99
- **Court:** Supreme Court of India
- **Decided:** 1975-12-19
- **Bench:** H. R. Khanna, S. Murtaza Fazal Ali
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/manganese-ore-india-ltd-v-the-regional-assistant-commissioner-of-sales-tax-6861
- **Pages:** 11

## Headnote

Central Sales Tax Act, 1956-S. 5(1) read with
Art. 286(1)(b) of the
Cdnstitution of India-Contract of sales occasioning export a'e eligible to tax
under s. 5(1) of the Central Sales Tax, 1956-Sales through an intermediary
buyer does not "occasion export".
"Stare Decisis" doctrine of, is a valuable principle of precedent requiring
B
special or extraordinary reasons to depart from.
C
Genial Sales Tax Act, 1956-Sec. 3(a), 4(2)(b) and 9-Sale in the course
of _inter-State trade or commerce-Conditions to be satisfied before a sale can
be said to take place.
Central Sales Tax Act, 1~56-Sec. 3(a)-"Moven1ent of goods"-Wltether
it 1nakes a distinction between unascertained goods and future goods-Scope of
s. 3(a).
Penalties for belated return under the Central Sales Tax Act when not pro-
.vided for, the State cannot take recourse to under the State Sales Tax ActSec. 10 (a) of the Central Sales Tax Act, 1956.
"Oriental ndxture"-Term used in the contract of sale, whether "manganese
ore" and liable to tax.
The appellant-Manganese Ore (India) Ltd. (a commercial venture where
the ·Government of India, Government of Maharashtra and
Government of
Madhya Pradesh hold shares in the ratio of 17 per cent each) entered into four
types of "contracts of sale" with buyers in India and outside India for selling
the manganese ores extracted from the mineral mines leased out to it and situated
in the States of ~Iadhya Pradesh and Maharashtra. Tuey were (a) category I
are the contracts ¥/here the appellant directly sent the ores to two foreign companies on f.o.b. terms; (b) category II represents contracts which were entered
into by the appellant with the Mineral and Metals Trading Corporation of India
Ltd., under which the appellant despatched manganese ore of varying percentage
to the M.M.T.C., f.o.b. Bombay and the M.M.T.C, in turn exported the goods
to foreign buyers; (c) category III relates to the sales to M/s. Ram Bahadur
Thakur & Co., Bombay and other buyers who in their turn sold the goods to
M.M.T.C. for export; and (d) category IV relates to the sales in favour of the
buyers within the territories of India, but outside the State.
According to s. 3(a) and 9 of the Central Sales Tax Act, the State of Madhya
Pradesh was competent to levy tax on the sales in the course- of inter·State trade
or conunerce.
Under s. 5(1) of the Central Sales Tax Act, sales occasioning
export or in the course of export are exempt from the purview of the Act.
In respect of categories II to IV, the Sales Tax Authorities levied tax under
the Central Act, holding that they were in the course of inter-State trade or
commerce and imposed a pen~lty of Rs. 1,000/- under the Madhya Pradesh
General Sales Tax Act for belated filing of returns. The writ petition filed by
the assessee in the Madhya Pradesh High Court failed.
D
E
F
G
Dismissing the appeal by special leave and quashing the penalty imposed,
H
the Court.
HELD : As no export was involved so far as the buyers in India are concerned; s. 5 (I) of the Central Sales Tax Act has no application at all. This
100
SUPREME COURT REPORTS
[1976) 3 S.C.R.
-A
point is no longer "res integra" in view of the Constitution Bench Division of
this Court in Md. Serajuddin and others v. State of Orissa, [1975] 2 SCR 47
Where the sale was not directly and substantively connected with export, and
where between the seller and ultimate buyers intermediaries are involved, such
a sale would not occasion any export and would not fall within the purview of
s. 5(1) of the Central Sales Tax Act. [102 G, 103 C-D]
Md. Serajuddin & others v. State of Orissa, [1975] 2 SCR, 47, app!ied.
B
(2) The doctrine of "Stare Decisis" is a very valuable principle of precedent
c
which cannot be departed from unless there are extraordinary or special reasons
to do so, and more so to reconsider a recent constitutional decision. [103 GJ
(3) Before a sale can be said to take place in the course of inter-state trade
or commerce, the follov.:ing conditions must be satisfied

## Text

99
MANGANESE ORE (INDIA) LTD.
A
v.
THE REGIONAL ASSISTANT COMMISSIONER OF SALES TAX,
~
JABALPUR
•
December 19, 1975
(H. R. KHANNA AND S. MURTAZA FAZAL ALI, JJ.]
Central Sales Tax Act, 1956-S. 5(1) read with
Art. 286(1)(b) of the
Cdnstitution of India-Contract of sales occasioning export a'e eligible to tax
under s. 5(1) of the Central Sales Tax, 1956-Sales through an intermediary
buyer does not "occasion export".
"Stare Decisis" doctrine of, is a valuable principle of precedent requiring
B
special or extraordinary reasons to depart from.
C
Genial Sales Tax Act, 1956-Sec. 3(a), 4(2)(b) and 9-Sale in the course
of _inter-State trade or commerce-Conditions to be satisfied before a sale can
be said to take place.
Central Sales Tax Act, 1~56-Sec. 3(a)-"Moven1ent of goods"-Wltether
it 1nakes a distinction between unascertained goods and future goods-Scope of
s. 3(a).
Penalties for belated return under the Central Sales Tax Act when not pro-
.vided for, the State cannot take recourse to under the State Sales Tax ActSec. 10 (a) of the Central Sales Tax Act, 1956.
"Oriental ndxture"-Term used in the contract of sale, whether "manganese
ore" and liable to tax.
The appellant-Manganese Ore (India) Ltd. (a commercial venture where
the ·Government of India, Government of Maharashtra and
Government of
Madhya Pradesh hold shares in the ratio of 17 per cent each) entered into four
types of "contracts of sale" with buyers in India and outside India for selling
the manganese ores extracted from the mineral mines leased out to it and situated
in the States of ~Iadhya Pradesh and Maharashtra. Tuey were (a) category I
are the contracts ¥/here the appellant directly sent the ores to two foreign companies on f.o.b. terms; (b) category II represents contracts which were entered
into by the appellant with the Mineral and Metals Trading Corporation of India
Ltd., under which the appellant despatched manganese ore of varying percentage
to the M.M.T.C., f.o.b. Bombay and the M.M.T.C, in turn exported the goods
to foreign buyers; (c) category III relates to the sales to M/s. Ram Bahadur
Thakur & Co., Bombay and other buyers who in their turn sold the goods to
M.M.T.C. for export; and (d) category IV relates to the sales in favour of the
buyers within the territories of India, but outside the State.
According to s. 3(a) and 9 of the Central Sales Tax Act, the State of Madhya
Pradesh was competent to levy tax on the sales in the course- of inter·State trade
or conunerce.
Under s. 5(1) of the Central Sales Tax Act, sales occasioning
export or in the course of export are exempt from the purview of the Act.
In respect of categories II to IV, the Sales Tax Authorities levied tax under
the Central Act, holding that they were in the course of inter-State trade or
commerce and imposed a pen~lty of Rs. 1,000/- under the Madhya Pradesh
General Sales Tax Act for belated filing of returns. The writ petition filed by
the assessee in the Madhya Pradesh High Court failed.
D
E
F
G
Dismissing the appeal by special leave and quashing the penalty imposed,
H
the Court.
HELD : As no export was involved so far as the buyers in India are concerned; s. 5 (I) of the Central Sales Tax Act has no application at all. This
100
SUPREME COURT REPORTS
[1976) 3 S.C.R.
-A
point is no longer "res integra" in view of the Constitution Bench Division of
this Court in Md. Serajuddin and others v. State of Orissa, [1975] 2 SCR 47
Where the sale was not directly and substantively connected with export, and
where between the seller and ultimate buyers intermediaries are involved, such
a sale would not occasion any export and would not fall within the purview of
s. 5(1) of the Central Sales Tax Act. [102 G, 103 C-D]
Md. Serajuddin & others v. State of Orissa, [1975] 2 SCR, 47, app!ied.
B
(2) The doctrine of "Stare Decisis" is a very valuable principle of precedent
c
which cannot be departed from unless there are extraordinary or special reasons
to do so, and more so to reconsider a recent constitutional decision. [103 GJ
(3) Before a sale can be said to take place in the course of inter-state trade
or commerce, the follov.:ing conditions must be satisfied : (i) that there is an
agreement to sen which contains a stipulation express or implied regarding the
movement of the goods from one State to, another; (ii) that in pursuance of the
said contract the goods in fact moved from one State to another; and (iii) that
ultimately a concluded sale takes place in the, State where the goods are sent
\vhich must be different from the State from which the goods move. If these
conditions are satisfied, then by virtue of s. 9 of the Act, it is the State from
which the goods move which will be con1petent to levy the tax under the provisions of the Act. [104 D-FJ
Balabhgas Hulasc71and and others v. State of Orissa, [1976] 2 SCR, 939
relied on.
(4) So far ass. 3(a) of the Central Sales Tax Act is concerned, there is no
distinction between unascertained and future goods and goods which are already
in existence, if at the time when the sale takes place these goods have come
into actual physical existence. [108 B]'
Balabhgas Hulsachand and others v. State of Orissa, [1976] 2 S.C.R., '939
applied.
(5) In the absence of any provision for penalty under the Central Sales
Tax Act itself it is not open to the Sales Tax Authorities to press into the service
the provisions of the State SaJes Tax. [108 G]
(6) In the instant case, a careful perusal of the agreem;nts would clearly
show that what the buyers wanted and what was actually sold to them \\'as
manganese ore and after all the goods were stocked together, the requirOO percentage under the contracts of sale automatically come into existence. The
word "oriental mixture" is merely a technical terminology or just another name
for what is known in the commercial world as manganese ore.
Therefore, it
is clear that it was manganese ore and manganese ore alone which 1vas sought
to be sold by fhe appellant to various buyers in India. The mere fact that
certain specific contracts have been mentioned does not alter the character and
quality of the goods fhat are actually supplied by the appellant to its various purchasers.
In these circumstances, therefore, the theory of the ore supplied by
the appellant being only one constituent and not the
entire
goods
$Old
is
illusory. [105 D-F, 107 B-D]
Central Provinces Manganese Ore Co., Ltd. v. The State of Afaharashtra,
S.T. Ref. 17-20/1964 decided on 7-4-1969 by
Bombay High
Court, Com111issioner of Sales Tax. Eastern Division Naf!pur v. Hltssenali Adan1ji and conzpany and another, 10 S.T.C. 297, (Distinguished).
OVIL APPELLATE JURISDICTION : Civil Appeal No. 599 of 1975.
(Appeal by special leave from the judgment and order dated the
23-4-1974 of the Madhya Pradesh High Court at Jabalpur in Misc.
Petition No. 542 of 1971).
:ll
s. V. Natu, D. ](. Kambarkar and V. N. Ganpule, for the appellant.
Ram Pa11jwa11i and.H. S. Parihar, for the respondent.
'
,.,.
- ..;
'
MANGANESE ORE LTD. V. R.A.C. (Fazal Ali, J.)
I 0 I
The Judgment of the Court was delivered by
FAZAL ALI, J.-This is an appeal by special leave against the
judgment and order of the Madhya Pradesh High Court dated April
23, 197 4 dismissing the writ petition filed by the appellant before the
High Court for quashing the order of the Assessing Authorities imposing tax under the Central Sales Tax Act, 1956 on the basis of a number
of sales made by the appellant Company in pursuance of multifarious
contracts of sale.
The appellant Company was formed in pursuance
of an agreement dated June 8, 1962 between the President of India
and the Central Provinces Manganese Ore Company Limited.
Before
this agreement the said Company which will be hereafter referred to as
the 'C.P.M.0.C.' was a private company incorporated in the United
Kingdom and carried on the business of extracting manganese ore from
several mines in the erstwhile States of C.P. & Berar and Bombay.
By virtue of the agreement referred to above a new Company was
fo,rmed under which the Government of India, the Government of
Maharashtra and the Government of Madhya Pradesh held shares in
the ratio of 17% each whereas the original Company C.P.M.0.C. retained shares to the extent of 49%.
Thus the position was that in
the present commercial venture the Central Government had preponderance of share.
The appellant, after the formation of the new
Company, was known as Manganese Ore (India) Ltd. which will hereafter be referred to as the M.O.I.L. Fresh leases to extract the minerals
from the various mines were issued by the Government in favour of
the M.O.I.L. and the Company entered into contracts with buyers in
India and outside for selling the manganese ore extracted from the
various mines situated in the States of Madhya Pradesh and Maharashtra.
A close analysis of the contracts entered into by the appellant
Company and the business carried on by it would manifestly reveal that
the contracts may be divided into four separate and clear categories.
Category·! are the contracts by which the manganese ore extracted
by the appellant ·company_ is sent directly to a foreign company known
as M/s. Philips Brothers on f.o.b. terms.
Another such contract was
entered into by the appellant with B.I.S.C. (Ore) Ltd., London for
sale of oriental manganese ore f.o.b. Visakhapatnam.
Copies of these
contracts were filed before the High Court as Annexures Q & R.
The
Regional Assistant Sales Tax Commissioner accepted the contention
of the appellant that so far as the sales under these contracts were concerned, they occasiorn;_d export and were clearly exempt from
the
Central Sales Tax Act as they fell within the purview of s. 5 ( 1) of the
said Act.
We might also mention here that the main dispute between the parties is regarding the applicability of ss. 3(a), 4(2)(b) and
9 of the Central Sales Tax Act, according to which the State of Madhya
Pradesh was competent to levy tax on the sales made by the appellant
in the course of which the manganese ore moved from the State of
Madhya Pradesh to other States in India.
The main contention of the
appellant before the High Court as also before the Sales Tax Authorities was that all these sales were outside sales and not in the course of
A
B
c
D
E
F
G
H
A
B
c
D
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F
G
JO 2
SUPREME COURT REPORTS
[1976] 3 S.C.R.
inter-State trade or commerce and therefore the provisions of the Central Sales Tax Aat did not apply.
The Assistant Sales Tax Commissioner negatived the contention of the appellant and hence a writ petition was filed before the High Court.
We might also mention that
the writ petition was filed by the appellant company before the High
Court even before taking recourse to the normal procedure laid down
under the Madhya Pradesh General Sales Tax Act, 1958.
This was
obviously done because the appellant chose to assail the levy of tax
on the ground that the Sales Tax Authorities did not possess any jurisdiction to impose the tax inasmuch as the sales were not at all covered
by the Central Sales Tax Act.
We have stressed this fact particularly
because before the High Court the appellant raised some questions re"
lating to the merits of the matter which could be properly agitated before an Appellate or Revisional authorities under the Madhya Pradesh
General Sales Tax Act.
Thus so far as the sales in Category-I are
concerned, the Assistant Sales Tax Commissioner accepted the plea of
the appellant and did not levy any tax on those sales.
These sales,
therefore, did not form the subject matter of the present appeal before
us.
This position was conceded by both sides.
Category-II represents contracts which were entered into by the appellant company with the Minerals and Metals Trading Corporation of
India Ltd.-hereinafter referred to as MMTC under which the appellant despatched manganese ore of varying percentage to the MMTC
f.o.b. Bombay.
After having received the goods from the appellant the
MMTC exported the goods to foreign buyers.
The copies of the contracts comprising these sales are Annexures N, 0 and P, before the
High Court. ·
Category-III relates to sales as per agreements copies of which are
;- .
Annexures S, T and U by which the appellant sold to Mis Ram Bahadur Thakur & Company, Bombay and other buyers which in turn
sold the goods to the MMTC.
As regards these two categories, Category II and Category III, the
appellant advanced two-fold contentions before us. In the first place·
it was argued that as the goods were eventually exported by the buyers
from India to foreign countries, therefore, the sales made by the appellant were not inter-State sales but sales which occasioned exports and,
therefore, fell within s. 5 (JI) of the Central Sales Tax Act.
The High
Court after consideration of various aspects of the matter overruled the
contention of the appellant and held that as no export was involved so
far as the sales made by the appellant to the buyers in India were
concerned, therefore, s. 5 (I) had no application at all.
This matter
need not detain us further, because it is no longer res integra and is
now completely concluded by a Constitution Bench decision of this
Court in Md. Serajuddin and Others v. State of Orissa( 1) where Ray,
C.J., speaking for the majority observed as follows :
H
"To establish export a person exporting and a person importing are necessary elements and the course of export is
(I) (19751 2 S.C.R. 47
•
I
•
MANGANESE ORE LTD. v. R.A.C. (Fazal Ali, !.)
103
between them.
Introduction of a third party dealing independently with the seller on the one hand and with the importer on the other breaks the link between the two for then
there are two sales one to the intermediary and the other to
the importer.
The first sale is not in the course of export
because the export commences with the intermediary. The
tests are that there must be a single sale which itself causes
the export or is in the progress or process of export. There is
no room for two or more sales in the course of export.
x
x
x
x
x
The expression "occasions" in Section 5 of the Act means
the immediate and direct cause.
But for the contract between the Corporation and the foreign buyer, there was no
A
B
occasion for export.
Therefore, the export was occasioned
c:
by the contract of sale between the Corporation and the
foreign buyer and not by the contract of sale between the
Corporation and the appellant."
The Court clearly held that where the sale was not directly and
substantially connected with export, and where between the seller and
ultimate buyers intermediaries were involved, such a sale would not
occasion any export and would not fall within the purview of s. 5 (I)
of the Central Sales Tax Act. It is not disputed that all the sales
covered by Category II and Category III were actually made by the
appellant not to any foreign exporter but to buyers inside India whether it was MMTC or whether they were other private firms.
In these
circumstances, therefore, the sales mentioned above could not 'Je said
to be sales which occasioned any export.
The High Court, therefore.
rightly found that these sa.Jes were completed within the territory or
India when the goods passed to the buyers.
The High Court further
found as follows :
"For these reasons, it cannot be held that these sales OC·
casioned the export within Section 5 ( 1) of the Central Sales
Tax Act and were sales in the course of export."
D
E
The High Court relied on a number of authorities, but in view of
F
the decision of this Court in Md. Serajuddin's (supra) case it is not
necessary for us to consider those anthorities at all, because the mat~cr
has now been concluded by a decision of this Court.
In fact this
position was conceded by Mr. Natu appearing for the appellant but he
tried to persuade us to refer the case to a larger Bench for reconsidering Md. Serajuddin's (supra) case.
We are, however, unable to
agree with the prayer made by the learned counsel for the appellant
G
because this Court has given its decision recently and the doctrine of
stare decisis is a very valuable principle of precedent which cannot be
departed from unless there are extra ordinary or special reasons to do
so.
We are unable to find anv special reasons for reconsidering Md.
Serajuddin's case (supra). partimlarly when this Court has laid down
the rule, namely, that where the sale is in fact and in law a pure interState sale, it cannot be treated to be a sale occasioning export. This,
H
therefore, disposes of the first plank of attack made by the appellant
8-390SCIJ76
A
B
c
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E
F
G
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104
SUPREME COURT REPORTS
[1976] 3 S.C.R.
on the judgment of the Madhya Pradesh High Court so far the sales
contained in Categories II and III are concerned.
Category-IV is in respect of contracts of sale, copies of which are
Anncxures 1 to 7 before the High Court.
These sales were admittedly made by the appellant in favour of the buyers within the terri·
tory of India but outside the State.
It was. however, contended
that as the goods purported to have been sold to the buyers did not
in fact move from the State of Madhya Pradesh, therefore, there was
no inter-State sale, but only an inside sale in the State where the
goods were delivered, and therefore the State of Madhya Pradesh
had no jurisdiction to levy tax under the Central Sales Tax Act.
The
same arguments were applied to Categories II and III on the ground
that if the sales comprised in Categories II and III were not sales
in the course of export they also were not inter-State sales, because
the goods which moved from the State of Madhya Pradesh were not
actually the goods which were sought to he sold to the buyers in other
States in India.
The Hi"h Court has considered this matter at g:reat
length and has relied on -a number of authorities.
In a recent judgment of this Court in Balabhgas Hulaschand and Ors. v. State of Orissa(1), after review of all the authorities on the point, this Court
held as follows :
'That the following conditions must be satisfied before
a sale can be said to take place in the course of inter-State
trade or commerce :
(i) that there is an agreement to sell which contains a
stipulation express or implied regarding the movement of the goods from one State to another;
(ii) that in pursuance of the said contract the goods in
fact moved from one State to another; and
(iii) that ultimately a concluded sale takes place in the
State where the goods are sent
which
must
be
different from the State from which the goods move.
If these conditions arc satisfied then by virtue of s. 9
of the Central Sales Tax Act it is the State from which the
goods move which will be competent to levy the tax under
the provisions of the Central Sales Tax Act."
On a careful consideration of the facts and circumstances of the present
case we are satisfied that the present case is directly covered by the
decision of this Court in Balabhgas Hu/ascha11d's case(').
The learned counsel for the appellant sought to distinguish Balabhgas Hu/aschand's case(!) on the ground that what was
despatched
from Madhya Pradesh was merely managanese ore of a particular
percentage but that was not the property which was sought to be purchased by the buyers in other States.
It was contended that under the
-
-·
(!) [!976J 2 S.C.R. 939.
i
(
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,
MANGANESE ORE LTD. v. R.A.C. (Fazal Ali, !.)
105
contracts of sale the property which was to be sold was continental
mixture which consisted of various kinds of rocks or manganese ore
which were mixed together.
What therefore was actually despatched,
according to counsel for the appellant, was merely one of the constituents of the goods purported to be snld and not the goods which
were ores purchased by the buyers. The High Court in its well reasoned judgment has fully considered this aspect of the matter and has
rightly pointed out that there is no mechanical or scientific process by
which the continental mixture is made.
According to the appellant
itself the mixture comes into existence automatically by piling up
manganese ore despatchted from various States one after the other.
In
other words, the position is that suppose I 000 tons of manganese ore
is sent from Madhya Pradesh and another thousand tons from various
mines from Maharashtra, when these ores are stocked at one place
by being piled up one upon another they automatically produce continental mixture with various constituents properties and percentages
required.
Mr. B. Sen appearing for the respondent submitted that what was
actually sold was manganese ore of an average percentage and it was
not right to say that actually one of the constituents of the manganese
ore was despatched by the appellant from various mines situated in the
State of Madhya Pradesh.
In fact, manganese ore like iron or coal
is a special type of commodity which is not capable of undergoing
any scientific process of mixing up resulting in an end product.
We
find ourselves in complete agreement with the argument of the learned
counsel for the respondent. It seems to us that the word 'oriental
mixture' which has no doubt been used in some of the agreements
produced by the appellant is a misnomer, because this is merely a
technical terminology or just another name for what is known in the
commercial world as manganese ore of an average or standard oercentage of about 49%.
A careful perusal of the. agreements woold
clearly show that what the buyers wanted and what was actually sold
to them was manganese ore and after all the goods were stocked
together the required percentage under the contracts of sale automatically came into existence.
For instance, the relevant provisions of one
of the contracts, which has been quoted by the High Court, runs
thus :
"QUALITY : The average quality of the ore to
be
supplied by sellers should be, without guarantee, 49.25%
Manganese, 0.15% Phosphorus, 9% Silica and 7.5% Iron
PROVIDED ALWAYS that as such supplies are furnished
by mixtures of ores from the sellers' several mines the average quality of the samples taken from deliveries fr.om each
mine shall form the basis of settlement."
It would be seen that what was to be supplied was only manganese
ore of the percentage of 49.25%. Properties like Phosphorus Silica
and Iron are inherent constituents of manganese ore and are' bound
to be found in every manganese ore.
Similarly in another contract
A
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10 6
SUPREME COURT REPORTS
[1976] 3 S.C.R.
A
which appears at p. 117 of the Paper Book and which was entered
into by the appellant with the MMTC the relevant passage runs thus :
B
c
D
"The execution of this Sale Agreement is dependent on
the sellers being able to rail the ores from the mines to the
port for shipment and also of the grant of any necessary
export permit.
1. QUALITY: 30,000 (Thirty thousand tonnes) of 1000
kgs. each, 5 % more or less at Buyers' option.
2. SPECIFlCATIONS:
Mn.
rejection
Fe.
Silica+ Alumina
Phos.
basis
below
48%
46%
10% maximum
14% maximum
0.18% maximum"
Here also it would appear that the agreement is only for sale of manganese ore.
Although a certain percentage is mentioned but that percentage is derived automatically when the manganese ores are stocked
together.
In most of the other contracts which have been filed by
the appellants, for instance, in another contract which has been enterE
ed into between the appellant and the MMTC on February 22, 1968
what is sold is 'Oriental grade manganese ore'.
Similarly in another
)
contract between the appellant and M/ s Ram Bahadur Thakur & 1
Company dated February 28, 1968 the property sold is about 25,000
Metric Tonnes of Oriental Mixture of Manganese Ore.
In another
contract which appears at p. 147 of the Paper Book and which is between the appellant and the Universal Ferro & Allied Chemicals Ltd.,
F
Tumsar Road, what is sold is 12,000 metric tonnes of Manganese
Ore.
There was another stipulation as to delivery in respect of this
contract as follows :
"The sellers will load the component ores from
their
mines into the wagons which will be arranged for by the
buyers who shall be the consignees, in the name of the
G
sellers, who shall be the consignors, at such mines' sidings and
for such quantities as may be declared from time to time
by the sellers' Managing Director, the destination of all the
wagons being Tumsar in the State of Maharashtra and the
railway freight being payable by the buyers at the destination.
As aforesaid, after the loading of the component ores into
wagons the buyers shall be responsible in all respects in
H
respect of the goods so loaded into the wagons."
The stipulation in this contract that after loading the component ores
into the wagons the buyers shall be responsible in respect of the goods
'
MANGANESE ORE LTD. v. R.A.C. (Fazal Ali, J.)
107
is a clear pointer to the fact that the manganese ores that were loaded
into the wagons were undoubtedly the goods which were purported
to be sold under the contract of sale, otherwise the buyers would not
have taken the responsibility for the ores loaded into the wagons if
it was really not the ores which the appellant were to supply but merely
a constituent thereof.
A close perusal of the various contracts of sale entered into by
the appellant would, therefore, clearly disclose that it was manganese
ore and manganese ore alone which was sought to be sold by the appellant to various buyers in India.
The mere fact that certain
specifications have been given or certain percentages have been mentioned does not change the character or the quality of the goods thaf
are actually supplied by the appellant to its various purchasers.
Another important feature of the contract of sale is that a certain
amount of tonnage of manganese ore is to be supplied by the appellant
which is stretched over a period of few months which shows that the
appellant was to supply the ore in instalments. In these circumstances, therefore, the theory of the ore supplied by the appellant being
only one constituent and not the entire goods sold appears to be purely
illusory and is not at all supported even by the contracts of sale filed
by the appellant.
For instance, if a firm placed an order for 1000
bales of cloth to be supplied to it by the seller in the course of five
months and in pursuance of this contract if the seller supplies 200
bales every month it cannot be said that the first instalment of 200
bales is not the goods sold but only a constituent of the same.
On
a parity of reasoning, therefore, the manganese ores loaded by
the
appellant in the railway wagons in the State of Madhya Pradesh, are
clearly included in the contract of sale which itself provides that the
supply has to be made within a specified period of few months.
Learned counsel for the appellant placed great reliance on a judgment of the Bombay High Court, a certified copy of which has been
filed in this Court in the Central Provinces Manganese Ore Company
Ltd. v. The State of Maharashtra( 1). In the first place this judgment
is not at all applicable to the facts of the present case, because the
Bombay High Court was not dealing with a sale under the Central
. Sales Tax Act.
The High Court was pre-eminently concerned with
the provisions of the C.P. and Berar Sales Tax Act, 1947 and there is
nothing to show that the provisions of that Act were in pari materia
to the provisions of the Central Sales Tax Act.
More than this, we
do not want to say about the judgment of the Bombay High Court.
Reliance was also placed by the appellant on a decision of this
Court in Commissioner of Sales Tax, Eastern Division, Nagpur v.
Husenali Adamji and Company & Another(') which also does not
appear to be applicable to the facts of the present case, because the
Supreme Court in that case was dealing with the question as to when
the title in the goods passes.
(1) Sales Tax Reference Nos. 17, 18, 19 and 20of1964 decided on April 7, 1969.
(2) 10 S.T.C. 297.
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
10 8
SUPREME COURT REPORTS
[1976] 3 S.C.R.
Lastly it was contended by counsel for the appellant that as the
manganese ores despatched by the appellant were unascertained
or
future goods which would come into existence only after the manganese ores extracted in various mines in Madhya Pradesh and Maharashtra were stocked and piled up one after the other the provisions
of s. 3 (a) of the Central Sales Tax Act would not apply.
This contention is completely without substance in view of the decision of thic;
Court in Balabhgas H ulaschand' s. case, (supra) where it was pointed
out that so far as s. 3 (a) of the Central Sales Tax Act is concerned
there is no distinction between unascertained and future goods and
goods which arc already in existence, if at the time when the sale takes
place these goods have come into actual physical existence.
In the
instant case also it was never disputed before the High Court or before
us that the manganese ore was loaded into the wagons after being
extracted from the mines and that the sales of these manganese ores
despatched from Madhya Pradesh to various States actually took place
and the goods were ultimately accepted by the buyers in other States.
In these circumstances, therefore, it is quite clear in this case that the
movement of the goods took place in pursuance of the contracts of
sale which ultimately merged into actual sales and it was only thereafter that the tax was sought to be levied by the State of Madhya
Pradesh. It was also not disputed that the tax has been levied only
on such sales of the manganese ore despatched from the State
of
Madhya Pradesh which came from the mines situated in the State of
Madhya Pradesh.
Thus all the incidents of an inter-State sale are present in the instant case and the view taken by the High Court that
the sales were covered by s. 3(a) of the Central Sales Tax Act is
absolutely i;orrect and we fully endorse the same.
These were the main arguments advanced before us by counsel
for the appellant.
Apart from these, some small points were also
argued by the learned for the appellant.
In the first place it was submitted that the Sales Tax Authorities had no jurisdiction to impose a
penalty of Rs. 1,000/- for the delay in filing the return under the
Central Sales Tax Act, because there was no provision in the Central
Act making a dealer liable to pay penalty for filing belated returns
and recourse could not be taken to the provisions of the State Act
on the subject.
The High Court negatived this plea following two
Division Bench judgments of the Madhya Pradesh High Court. The
view taken by the High Court on this point is legally erroneous because this Court in M/s. Khemka & Co. (Agencies) Pvt. Ltd. v. State
of Maharashtra (1) has pointed out that in the absence of any provision for penalty under the Central Sales Tax Act itself it is not open
to the Sales Tax Authorities to press into service the provisions of the
State Sales Tax Act. In this connection. this Court observed
as
follows :
"It is only tax as well as penalty payable by a dealer
under the Central Act which can be assessed, re-assessed,
collected and enforced in regard to payment.
The words
(I) [1975] 3 S.C.R. 753.
(
MANGANESE ORE LTD. v. R.A.C. (Fazal Ali, J.)
I 09
as if the tax or penalty payable by such a dealer under the
Central Act is a tax or penalty payable under the general
sales tax law of the State" have "origin and root in
the
words" payment of tax including any penalty payable
by
dealer under the Central Act".
x
x
x
x
x
x
For the foregoing reasons we are of opinion that the
provisions in the State Act imposing penalty for non-payment of income-tax within the prescribed time is not attracted to impose penalty on dealers under the Central Act in respect of tax and penalty payable under the
Central
Act.
x
x
x
x
x
The Central Act
contains specific provisions for penalty. Those are the only
provisions for penalty available against the dealers under the
Central Act.
Each State Sales Tax Act contains provisions
for penalties.
These provisions in some cases are also for
failure to submit return or failure to register.
It is rightly
said that those provisions cannot apply to dealers under the
Central Act because the Central Act makes similar provisions."
In this view ol' the matter, therefore, this part of the order of the
High Court must be set aside and the penalty imposed by the Assistant Sales Tax Commissioner must be quashed.
It was then submitted that a purchase tax on a
turnover
of
Rs. 748/- has been levied under s. 7(1) of the Madhya Pradesh General Sales Tax Act. It was, however, pointed out by the respondent
that the tax was actually levied on the purchases made by the appellant from unregistered dealers and is a very petty amount.
In view
of this concession, learned counsel for the appellant did not press this
matter.
The finding of the High Court on this point is, therefore,
affirmed.
Lastly it was submitted that the Assistant Sales Tax Commission -
er was wrong in holding that the turnover in respect of inter-State sales
was not supported by 'C' Forms.
This is also a matter which relates
to the merits of the case which could be properly agitated before the
Appellate or Revisional authorities under the State Sales Tax Act.
A
ll
c
D
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The result is that the penalty of Rs. 1000/- imposed by the AssistG
ant Sales Tax Commissioner is quashed.
All other contentions raised
by the appellant fail and the judgment of the High Court on those
points is hereby affirmed.
The appeal is accordingly dismissed with
the modification indicated above, but in the circumstances without any
order as to costs.
S.R.
Appeal dismissed.
H