# UNION OF INDIA & ANR v. K. G. KHOSLA & CO. (P) LTD. & OTHERS

- **Citation:** [1979] 3 S.C.R. 453
- **Court:** Supreme Court of India
- **Decided:** 1979-03-06
- **Case number:** Civil Appeal No. 2077 of 1972
- **Bench:** Y. V. Chandrachud, D. A. Desai, R. S. Pathak
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-anr-v-k-g-khosla-co-p-ltd-others-7632
- **Pages:** 10

## Headnote

Central Sales Tax Act, 1956 S. 3(a)-Scope of-Goods manufacturf!d in the
State of Haryana in accordance with production progrannne advised by
head
office-Goods despatched from-Delhi-Whether inter-state or intra-state sale.
A
B
The respondent company who was a manufacturer of afr compressors and
garage equipment had its- factory at Farid21bad (in the State of Haryana) and
C
its head office in Delhi (Union Territory of Delhi). The head office drew the
production programme and advised the factory to manufacture the goods in
accordance therewith. After the goods were so manufactured in the factory
they \Vere collected by the head office and brought to Delhi and despatched to
various customers Whether outside Delhi or in Delhi. The price of goods was
received at the head office. In other words excepting the manufacture of goods
at the factory all other activities, were catTied out from the head office in Delhi.
D
In respect of sale of goods manufactured at Faridabad the respondent company filed sales tax returns with the sales tax authorities at Delhi on the ground
that the sales ·were effected from Delhi by the head office -and that they were
intra-state sales within the territory of Delhi and accordingly paid sales tax at
Delhi.
In November, 1965, however, the sales tax authorities of Haryana demanded payment of sales tax under the East Punjab General Sales Tax, Act, 1948
for the period commencing from April 1, 1961 and ending \Vith the year 1964-65
pointing out that the sales effected were inter-state sales liable· to be assessed
by them under the Central Sa\'es Tax Act, 1956.
In its writ petition the respondent-company alleged that since all its activities were being carried on by or through the head office in Delhi and no sales
were effected by. or from the factory at Farida.bad sales tax was paid by it in
Delhi and since the sales tax authorities in Haiyana were demanding payment
of Central Sales Tax in respect of the same transaction the High Court might
resolve the controversy .
The High Court held that the sales fell under s. 3(a) of the Central Sales
Tax Ac~ 19 56 and were liable to be assessed to inter-state sales tax by the Sales
Tax Authorities at Faridabad and accordingly ordered that the sales tax
paid by the respondent in Delhi be transferred to the Sales Tax Authorities at
Faridabad.
On appeal the Union of India contended that since the situs of sale was
Delhi Sales Tax was payable in De1hi.
·Dismissing tht appeal,
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454
SUPREME COURT REPORTS
[1979] 3 s.c.R.
HELD
l(a) The High Court was right in holding that the sales were inter·
state sales and that the turnover on sales was assessable to sales tax under the
Central Sales Tax Act, 1956 and that the amounts of sales tax wrongly paid in
Delhi be transferred to the Sales Tax Authorities at Faridabad. [462 A-BJ
(b) In order that a sale may be regarded as an inter-state sale it is immaterial whether the pro.Jfrty in the goods passes in one State or another. The
question as regards the nature of the sale, that is, whether it is an inter State
sale or an intra-State saJe does
~ot depend upon the circum11tance as to ~n
which State the property in the goods passes. It may pass in either and yet
the sale can he ao inter-State sale. [461 G-H, 462 A]
In the instant case the contract! of sales were made at Delhi and in pursu·
ance of those contracts, goods were manufactured at Faridabad according to
specifications mentioned in the contract:-i. This, therefore, is not that type of
case in which goods are manufactured in the general course of business for
being sold as and when offers are received by the manufacturer for their
pur~
chase. Contracts of sales were finalised in the instant case at Delhi and specific
goods were manufactured at Fa.ridabad in pursuance of those contracts. These
were "future goods" within the meaning of s. 2(6) of the Sale of Goods Act,
1930. After the goods were manufactured to agreed specifications, they were
despatched to the

## Text

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453
UNION OF INDIA & ANR.
v.
K. G. KHOSLA & CO. (P) LTD. & OTHERS
March 6, 1979
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[Y. V. CHANDRACHUD, C.J., D. A. DESAI AND R. S. PATHAK, JJ.]
Central Sales Tax Act, 1956 S. 3(a)-Scope of-Goods manufacturf!d in the
State of Haryana in accordance with production progrannne advised by
head
office-Goods despatched from-Delhi-Whether inter-state or intra-state sale.
A
B
The respondent company who was a manufacturer of afr compressors and
garage equipment had its- factory at Farid21bad (in the State of Haryana) and
C
its head office in Delhi (Union Territory of Delhi). The head office drew the
production programme and advised the factory to manufacture the goods in
accordance therewith. After the goods were so manufactured in the factory
they \Vere collected by the head office and brought to Delhi and despatched to
various customers Whether outside Delhi or in Delhi. The price of goods was
received at the head office. In other words excepting the manufacture of goods
at the factory all other activities, were catTied out from the head office in Delhi.
D
In respect of sale of goods manufactured at Faridabad the respondent company filed sales tax returns with the sales tax authorities at Delhi on the ground
that the sales ·were effected from Delhi by the head office -and that they were
intra-state sales within the territory of Delhi and accordingly paid sales tax at
Delhi.
In November, 1965, however, the sales tax authorities of Haryana demanded payment of sales tax under the East Punjab General Sales Tax, Act, 1948
for the period commencing from April 1, 1961 and ending \Vith the year 1964-65
pointing out that the sales effected were inter-state sales liable· to be assessed
by them under the Central Sa\'es Tax Act, 1956.
In its writ petition the respondent-company alleged that since all its activities were being carried on by or through the head office in Delhi and no sales
were effected by. or from the factory at Farida.bad sales tax was paid by it in
Delhi and since the sales tax authorities in Haiyana were demanding payment
of Central Sales Tax in respect of the same transaction the High Court might
resolve the controversy .
The High Court held that the sales fell under s. 3(a) of the Central Sales
Tax Ac~ 19 56 and were liable to be assessed to inter-state sales tax by the Sales
Tax Authorities at Faridabad and accordingly ordered that the sales tax
paid by the respondent in Delhi be transferred to the Sales Tax Authorities at
Faridabad.
On appeal the Union of India contended that since the situs of sale was
Delhi Sales Tax was payable in De1hi.
·Dismissing tht appeal,
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454
SUPREME COURT REPORTS
[1979] 3 s.c.R.
HELD
l(a) The High Court was right in holding that the sales were inter·
state sales and that the turnover on sales was assessable to sales tax under the
Central Sales Tax Act, 1956 and that the amounts of sales tax wrongly paid in
Delhi be transferred to the Sales Tax Authorities at Faridabad. [462 A-BJ
(b) In order that a sale may be regarded as an inter-state sale it is immaterial whether the pro.Jfrty in the goods passes in one State or another. The
question as regards the nature of the sale, that is, whether it is an inter State
sale or an intra-State saJe does
~ot depend upon the circum11tance as to ~n
which State the property in the goods passes. It may pass in either and yet
the sale can he ao inter-State sale. [461 G-H, 462 A]
In the instant case the contract! of sales were made at Delhi and in pursu·
ance of those contracts, goods were manufactured at Faridabad according to
specifications mentioned in the contract:-i. This, therefore, is not that type of
case in which goods are manufactured in the general course of business for
being sold as and when offers are received by the manufacturer for their
pur~
chase. Contracts of sales were finalised in the instant case at Delhi and specific
goods were manufactured at Fa.ridabad in pursuance of those contracts. These
were "future goods" within the meaning of s. 2(6) of the Sale of Goods Act,
1930. After the goods were manufactured to agreed specifications, they were
despatched to the head office at Delhi for being forwarded to the respective
customers at who9e instance and pursuant to the contracts with whom the goods
were manufactured. The despatch ·of goods of Delhi was but a
convenient
made of securing the pe1formance of contracts made at Delhi. Thus the move~
ment of goods was occasioned from Faridabad to Delhi as a result or incident
of the contracts of sale made in Delhi. [45& H, 459 A-D
(c) For the purpose of s. 3(a) it is not necessary that the contract of sale
must itself provide for and cause the movement of goods or that the movement
of goods must be occasioned specifica.lly in accordance with the terms of
contract of sale. [459 E]
Tata Iron and Steel Co. Ltd., Bombay v. S. S. Sark'ar & Ors., [1961] I SCR
379; Centrnl Marketing Co. of lndiu v. State of Mysore, [1963] 3 SCR '177;
State Trading Corporatiolj of India v. State of Mysore, [1963] 3 SCR 792; Singareni Collieries Co. v. Commissioner of Commercial Taxes, llyderabad, [1966] 2
SCR 190; K. G. Khasla & Co. v. Dy. Commr. of Comm.,cial Taxes, [1966]
3 SCR 352; Oil India Ltd. v. The Superintendent of Taxes &
Ors., [1975]
3 SCR 797; followed.
Tata Eng. & Locomotive Co. Ltd. v. The Asstt. Com1nr. of Commercial
Taxes & Anr., [1970] 3 SCR &62; distinguished.
State af Bihar & Anr. v. Tata Eng. &: Locomotive Co. Ltd., [1971] 2 SCR
849; referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2077 of 1972.
From the Judgment and Order dated 2-8-1971 of the Delhi High
Conrt in Civil Writ No. 162-D of 1966.
E. C. Agarwala and R. N. Sachthey for the Appellants.
Lal Narain Sinha, K. K. Jain, S. K. Gupta, Pramod Dayal and
Bishamber Lal for the Respondent No. 1
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UNION OF INDIA v. KHOSLA & co. (Chandrarhud, C.J.)
455
Rameshwar Dial, Adarsh Fial, and A. D. Mathur for Respondents
A
2-3.
The Judgment of the Court was delivered by
CHANDRACHUD, C. J.-This appeal by certificate raises an interesting controversy between the Sales Tax Authorities in the Union
Territory of Delhi and those in Haryana, the question being as
to
which of the two authorities can assess respondent 1 io sales tax. One
of the reliefs sought by respondent 1 is that until the Sales Tax authorities of the two territories settle their differences, no sales tax should
be levied or recovered from it since, it does not know to whom to
pay the tax. This controversy arises on the following facts.
Respondent 1 is a private limited company called K. G. Khosla &
Co. (P) Ltd., having its head office in the Union Territory of Delhi
at 1, Deshbandhu Gupta Road, New Delhi. The company carries on
business in Air Compressors and garage equipment which it manuB
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factures in its factory at Faridabad, which was formerly in the State
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-Of Punjab and is now a part of the State of Haryana.
For the purposes of sales tax, respondent 1 is
registered as a
dealer both in the Union Territory of Delhi and in the
State
of
Haryana. It filed returns of sales tax with the sales Tax authorities
in Delhi since, according to it, the sale of goods manufactured in
the factory at Faridabad was being effected from Delhi by its head
office.
The sales tax was being paid by the company under
the
Bengal Finance (Sales Tax) Act, 1941 as extended to Delhi, on the
basis that the sales effected by the company were intra-State
sales
within the territory of Delhi.
On November 24, 1965," however, the
Sales Tax Assessing Authority at Gurgaon, which was then in the
State of Punjab but which subsequently became a part of the State of
Haryana, sent a notice to the company under sections 11 and 14 of
the East Punjab Central Sales Tax Act, 1948 and rule 33 made thereunder that, in respect of the period commencing on April 1, 1961 and
ending with the year 1964-65, the sales made by the company were
liable to assessment in Haryana.
On March 13, 1968 an assessment was made by the Assessing Authority at Faridabad on the basis
that the sales effected by the company were inter-State sales liable to
be assessed to sales tax under the Central Sales Tax Act, 74 of 1956.
An appeal against the order of assessment is said to be pending.
In the meanwhile, on February 14, 1966, the company filed a writ
petition before the Punjab High Court Circnit Bench at Delhi which,
after the reorganisation of States, was dealt with by the Delhi High
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SUPREME COURT REPORTS
(1979] 3 S.C.R.
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Court.
The Chief Commissioner of the Union Territory of Delhi
and the Assessing Authority of the territory were impleaded as respondents 1 and 2 to the writ petition. Respondent 3 was the State of
Pnn)ab and respondent 4 the Assessing Authority at Gurgaon. Rcspon.
dent 3 was later substituted by the State of Haryana.
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The company contended by its writ petition that except the manufacturing of goods at the Faridabad factory, all of its activities, including those of booking of orders, sales, despatching of goods, billing
and receiving of sale price were being done by and through the head
office in Delhi and that no sales were effected by or from the factory.
Since, however, both the Sales Tax authorities, namely, at Delhi and
Haryana, were demanding payment of sales tax on the same
sale
transactions, the company prayed by its writ petition that the High
Court do resolve the controversy between the Sales Tax authorities
of the two States and decide the question of their respective jurisdiction•
to assess its turnover.
The State of Haryana contended by its counter affidavit to the writ
petition that the goods were manufactured by the company at Faridabad in pursuance of contracts of sale with outside purchasers, that
those goods were appropriated to the various contracts of sale in the
State of Haryana and that the movement of the goods from Faridabad'
to Delhi and onwards was caused as a necessary incident of
the
contracts of sale made by the company. The sales, according to the·
State of Haryaoa had taken place at Faridabad during the course of
inter-State trade.
The Union of India, on the other hand, contended that the goods
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were brought from Faridabad to Delhi and were thereafter sold by
the company to the various purchasers outside Delhi.
These sdes
according to the Union of India, were governed by the Bengal Finance
(Sales Tax) Act, 1941 as extended to Delhi, their situs being the
Union Territory of Delhi.
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The Delhi High Court by its judgment
dated August 2,
197f
allowed the writ petition and granted a declaration that the
salei;
effected by respondent 1 which fell under section 3 (a) of the Central
Sales Tax Act, 1956 were liable to be assessed to inter.State sales tax
by the Sales Tax authorities at Faridabad since, those sales caused the·
movement of goods from Faridabad to Delhi. The High Court added
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that the writ petition was confined to the goods
manufactured
at
Faridabad in pursuance of pre-existing contracts of sales and therefore, its judgment would have no application to the local sales;
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UNION OF INDIA v. KHOSLA & co. (Chandrachud, C.J.)
457
effected by respondent 1 at Delhi.
In the resnlt, the High Court
passed an order directing that the amount of tax which respondent 1
had wrongly paid to the sales tax authorities at Delhi on the interState sales between 1.4.1961 to 30•9-1965 be transferred by the
Sales Tax authorities at Delhi to the Sales Tax authorities at Faridabad. The High Court has granted a certificate of fitness to the Union
of India to file an appeal to this Court under Article 13 3 ( 1) (b) of
the Constitution.
The question which arises for decision is whether the sales made
by respondent 1 were made at Faridabad in the course of inter-State
trade as contended by the State of Haryana or whether they are intrastate sales effected within the Union Territory of Delhi as contended
by th~ appellant, the Union of India.
The answer to this question
would depend upon the course and nature of transactions in relation
to which the movement of goods was caused from Faridabad to Delhi
and the terms of the contracts of sales which caused that movement.
But before adverting to those aspects of the matter, it wonld be necessary to notice the relevant provisions of the Central Sales Tax Act 7 4
of 1956 ("The Act").
Section 3 of the Act provides as follows :
"3. When is a sale or purchase of goods said to take
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place in the course of inter-State trade or commerce :-
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A sale or purchase of goods shall be deemed to take place
in the course of inter-State trade or commerce if the sale or
purchase :-
(a) occasions the movement of goods from one State to
another; or
(b) is effected by a transfer of documents of title to the
goods during their movement from
one State
to
another."
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There are two Explanations to the section but they have no bearing on
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the appeal.
GSection 9(1) of the Act provides as follows :-
9. "Levy and collection of tax and penalties (1) the
tax payable by any dealer under this Act on sales of goods
effected by him in the course of inter-State trade or commerce, whether snch sales fall within clause .(a) or clause
(b) of section 3, shall be levied by the Government of India
and the tax so levied shall be collected by that Government
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SUPREME COURT REPORTS
[1979] 3 s.c.R.
in accordance with the provisions of sub-section (2), in the
State from which the movement of the goods commenced."
There is a proviso to section 9 (I) to which it is unnecessary to refer
since it has no application.
In the light of these provisions, what has to be considered is whether
the sales effected by respondent 1 occasioned the movement of goods
from one State to another State, which oh the facts of the instant case
would mean, from the State of Haryana to the Union Territory of
Delhi.
It is only if a sale occasions the movement of goods from one
State to another that it can be deemed to have taken place in the
course of inter-State trade or commerce within the meaning of 1;ection
3 (a) of the Act.
Clause (b) of section 3 is not relevant for our purpose.
The course and manner of its business have been set out by respondent · 1 in paragraphs 3 and 27 of the writ petition in the following terms :
"3. Orders for the supply of goods from various parti,es
are received by the petitioner's company at its head office in
Delhi. The head office draws out a production programme
and advises the factory to manufacture the goods in accordance therewith.
After the goods are so manufactured in the
factory, the goods are collected by the head office
and
brought to its head office in Delhi. From its head office the
goods are despatched to various customers whether outside
Delhi or in Delhi. The price of goods is also received at the
he-dd office. In short, the position is that excepting the manufacture of goods at the factory, all other activities including
that of booking of orders, sales, despatching and billing and
receiving of sale price are being carried out from the head
office in Delhi."
"27. The goods manufactured in the factory are future
goods within the meaning of the Sale of Goods Act and 11ie
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dispute does not relate to any ready goods."
It is clear from these averments that goods were manufactured
by respondent 1 in its factory at Faridabad, Haryana, in pursuance of
specific orders received by its head office at Delhi. The contracts of
sales were made at Delhi and in pursuance of those contracts, goods
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were. manufactured at Faridabad according to specifications mentioned
in the contracts. This, therefore, is not that type of case in which
goods are manufactured in the general course of business for being
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UNION OF INDIA v' KHOSLA & co. ( Chandrachud, C.J.)
4 5 9
sold as and when offers are received by the manufacturer for their
purchase. Contracts of sales were finalised in the instant case at
Delhi and specific goods were manufactured at Faridabad in pursuance
of those contracts.
Those were "future goods" within the meaning
of section 2(6) of the Sale of Goods Act, 1930.
After the goods
were manufactured to agreed specifications, they were despatched to
the head office at Delhi fat being forwarded to the respective customers
at whose instance and pursuant to the contracts with whom the goods
were manufactured.
The goods could as well have been despatched
to the respective customers directly from the factory but they were
sent in the first instance to Delhi as a matter of convenience, since
there are better godown and rail facilities at Delhi as compared with
Faridabad. The despatch of the goods to Delhi was but a convenient mode of securing the performance of contracts made at Delhi.
Goods conforming to agreed specifications having been manufactured
at Faridabad, the contracts of sale could be performed by respondent
1 only by the movemel\t of the goods from Faridabad with the i.ntention of delivering them to the purchasers. Thus, the movement of
goods was occasioned from Faridabad to Delhi as a result or incident
of the contracts of sale made in Delhi.
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It is true that in the instant case the contracts of sales did not
require or provide that goods should be moved from Faridabad to
Delhi.
But it is not true to say that for the purposes of section 3(a)
of the Act it is necessary that the contract of sale must itself provide
for and cause the movement of !\oods or that the movement of goods
must he occasioned specifically in accordance with the terms of the
contract of sale. The true position in law is as stated in Tata Iron
and Steel Co. Ltd., Bombay v. S. R. Sarkar and others(•)
wherein
Shah, J. speaking for the majority observed that clauses,(a) and (b)
of section 3 of the Act are mutually exclusive and that section 3(a)
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" (page 391). Sarkar, .J .
speaking for himself and on behalf of Das Gupta, J. agreed with the
majority that clauses (a) and (b) of section 3 are mutually exclusive
but differed from it and held that "a sale can occasion the movement
of the goods sold only when the terms of the sale provide that the
goods wonld. be moved; in other words, a sale occasions a movement
of goods when the contract of sale so provides" (page 407). The
view of the majority was, approved by this Court in the Central
(1) [1961! I SCR 379 .
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SUPREME COURT REPORTS
[1979] 3 s.c.R.
Marketing Co. of India v. State of Mysore,(') State Trading Corporation of India v. State of Mysore( 2 ) and Singareni Collieries Co. v.
Commissioner of Commercial Taxes, Hyderabad.(•) In K. G. Khosfa
& Co. v. Deputy Commissioner of Commercial Taxes,(4 ) counsel for
the Reveque invited the Court to reconsider the question but the Court
declined to do so.
In a recent decision of this Court in Oil India Ltd.
v. The Superintendent of Taxes & others(") it was observed by
Mathew, J., who spoke for the Court, that : (1) a sale which occasions movement of goods from one State to another is a sale in the
course of inter-State trade, no matter in which State the property ia
the goods passes; (2) 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; and (3) 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 ;:c the
movement was in pursuance of and incidental .to ·the contract of sale
(page 801). The learned Judge added that it was held in a number
of cases by the Supreme Court 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 iB an inter-State sale.
The decision in Tata Engineering & Locomotive Co.
Limited v.
The Assistant Commissioner of Commercial Taxes and Another(") on
which the Union of India relies, proceeds on a different consideration
and is distinguishable.
The appellant therein carried on the business
of manufacturing trucks in Jamshedpur in the State of Bihar.
The
sales office of the appellant in Bombay used to instruct the Jamshedpur
factory to transfer stocks of vehicles to the stockyards in various States
after taking into account the production schedule and requirements ol
customers in different States.
The stocks available in the stockyards
were distributed from time to time to dealers.
The transfer of the
vehicles from the factory to the various stockyards was a continuous
process and was not -related to the requirement of any particular custoG
mer.· It was the stockyard incharge who appropriated the required
number of vehicles to the contract of sale out of the stocks available
with him. Until such appropriation of vehicles was made, it was open
B
(I) [1963] 3 SCR 777
(2) [1963] 3 SCR 792
(3) [1966] 2 SCR 190
(4) [1966] 3 SCR 352
(5) [1975] 3 SCR 797
(6) [1970] 3 SCR 862
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UNION OF INDIA v. KHOSLA & co. (Chandrachud, C.J.)
461
to the company to allot any vehicle to any purchaser or to transfer
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the vehicles from the stockyard in one State to a stockyard in another
State.
At page 870 of the report, a statement occurs in the judgment
-0f Grover, J., that it was not possible to comprehend how in the above
situatJOn it could be held that "the movement of the vehicles from the
works to the stockyards was occasioned by any covenant or incident
-0f the contract of sale." This statement is relied upon by the Union of
India iμ support of its contention that the contract of sale must itself
provide for the movement of goods from one State to another.
We
are unable to read any such implication in the observation cited above.
At page 866 of the report, after referring to certain decisions,
the
Court observed that the principle admits of no doubt, according to the
decisions of this Court, that the movement of goods "must be the result
of a covenant or incident of the contract of sale."
This decision may be usefully contrasted with another
decision
between the same parties, which is reported in State of Bihar & Anr.
v. Tata Engineering & Locomotive Co. Ltd.('). In that case the turn-
-0ver in dispute related to the sales made by the company to its dealers
-0f trucks for being sold in the territories assigned to them under the
dealership agreements.
Each dealer was assigned an exclusive territory and under the agreement between the dealers and the company,
they had to place their indents, pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the company.
In pursuance of such delivery orders trucks used to be delivered
in the State of Bihar to be taken over to the territories assigned to the
dealers. Since under the terms of the contracts of sale the purchasers
were required to remove the goods from the State of Bihar to other
States, no question arose in the case whether it was or was not ne.:essary
for a, sale to be regarded as an inter-State sale that the contract must
itself provide for the movement of goods from one State to another.
If a contract of sale contains a stipulation for such movement, the sale
would, of course, be an inter-State sale.
But it an also be an interState sale, even if the contract of sale does not itself provide for the
movement oI goods from one State to another but such movement is the
result of a covenant in the contract of sale or is an incident of that
contract.
The decisions to which we have referred above show that in order
that a sale may be regarded as an inter-State sale, it is immaterial
whether the property in the goods passes in one State or another.
The
question as regards the nature of the sale, that is, whether it is an inter-
(1) [1971] 2 SCR 849.
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SUPREME COURT REPORTS
fl 979] 3 S.C.R,
A
State sale or an intra-State sale, does not depend upon the circums-
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tances as to iu which State the property in the goods passes. It may
pass- in either State and yet the sale can be an inter-State sale ..
The High Court was, therefore, right in holding that the sales in
question are inter-State sales and that the turnover of sales is assessable
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to sales tax under the Central Sales Tax Act, 1956 at the instance of
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the Sales Tax authorities at Faridabad. The amount of tax which
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respondent has wrongly paid to the Sales Tax authorities at Delhi on
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such inter-State sales from 1-4-1961 to 30-9-1965 shall have to be
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transferr<:d by the Sales Tax authorities at Delhi to the Sales Tax authot
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ritiei; at Faridabad, as directed by the High Court.
c
The appeal is accordingly dismissed but there will be no order as to
costs.
I
Appeal dismissed.
""
N.K.A
JI
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