Citation Codes

Equivalent Citations

citation codes

Case Number

Civil Writ Jurisdiction Case No. 1194 of 1983 (R) with Civil Writ Jurisdiction Case Nos. 1143, 1411 and 1463 of 1983 (R)

Advocates

T.K.Das
Suresh Prasad Singh
Sunil Kumar Sinha
Shambhu Prasad
S.B.Gadodia
Ram Balak Mahto
Pradeep Kumar
M.S.Mittal
Kameshwar Prasad
D.K.Sarkar
B.S.Lal
Ayodhya Prasad

Judges

S.B Sanyal, J.

Acts

section-3(a) and Section 9(1) of the Central Sales Tax Act (74 of 1956) (hereinafter
Clause G of Rule 3 of the aforesaid Rules
SECTION 3 CENTRAL SALES TAX ACT
Uttar Pradesh Sales Tax Act.
Rule 3 of the said Rules,
CENTRAL SALES TAX ACT
Orissa Sales Tax Act
Bihar Sales Tax Act.

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Smart Summary

Structured Summary of the Opinion (S.B. Sanyal, J.)

Factual and Procedural Background

Four writ petitions raising a common question were heard together and disposed of by a common judgment. The petitions arise from purchases by out-of-State dealers (manufacturers or firms registered under the Central Sales Tax Act and their respective State Sales Tax Acts) of khair billets and/or other forest produce from the Forest Department/State Trading Corporation in Bihar. The buyers had no place of business in Bihar and moved the purchased goods to their factories or places of business in other States (Uttar Pradesh or Orissa) for manufacture or use.

Sales were effected either by auction or by inviting tenders. The contracts and annexed agreements contained provisions (including clauses 13, 14 and 20 and other clauses) requiring permits for movement, prescribing routes and vehicle registration with the seller, prohibiting transfer of delivery orders/railway receipts, and making the seller/Corporation retain certain controls, including security deposit adjustment and forfeiture for breach. Forest transport permits, issued under the Rules framed under the Forest Act, specified destination and route.

Disputes arose between the petitioners and revenue/forest authorities on whether these transactions were subject to Bihar Sales Tax or were inter-State sales liable to Central Sales Tax (CST) at 4% on filing Form C. Some authorities and the Chief Conservator of Forest had earlier taken the position that registered out-of-State dealers paying on production of Form C should be treated as liable for CST. The petitions sought directions including (depending on the petition) quashing of demands for Bihar Sales Tax, refund or adjustment of State tax collected, release of security deposits, and a declaration that the transactions were inter-State sales within section 3(a) of the Central Sales Tax Act.

Legal Issues Presented

Whether purchases of khair billets and/or forest produce from the Forest Department in Bihar constitute sales within the State of Bihar or sales "in course of inter-State trade or commerce" (i.e., inter-State sales) for the purposes of section 3(a) of the Central Sales Tax Act, thereby making them liable to Central Sales Tax at 4% upon filing Form C?
Whether, given the contractual terms, permits and the seller's control over movement, the sale is "concluded" in the destination State (where the goods are appropriated) such that the transaction should be treated as an inter-State sale under section 3(a) of the Central Sales Tax Act?

Arguments of the Parties

Petitioners' Arguments

The transactions occasioned movement of goods from Bihar to other States as per the sale agreement and the forest transport permit; accordingly they fall within section 3(a) of the Central Sales Tax Act and are inter-State sales.
The permit (issued under the Forest Rules) is part of the contract of sale and expressly provides route and destination; movement pursuant to that permit is in accordance with contract terms, so sale occasions inter-State movement.
It is immaterial where title or property in the goods passed; what matters is that the sale occasions the movement and that, as an incident of the contract, the buyer only obtains disposal rights at the destination State where the goods are appropriated.
Under the contract the buyer cannot transfer delivery orders, railway receipts or permits; the seller prescribes vehicles, routes and retains supervisory control over movement until destination. Therefore the transaction "closes" (i.e., buyer obtains full control and right of disposal) only at the destination State.
They relied on several authorities, principally Union of India v. M.G. Khosla & Co. Ltd. (AIR 1979 SC 1160) and English Electric Co. v. Deputy Commercial Tax Officer (AIR 1977 SC 19), in support of their interpretation that the movement need not be specified in the contract as long as it is an incident of the sale.

Respondent / State Arguments (Advocate General)

The sale was concluded within the State of Bihar; therefore the transactions are intra-State sales liable to Bihar Sales Tax. The decisive test is where the sale was concluded.
Even if movement subsequently occurred, the fact that price was paid and delivery order handed over in Bihar means the sale was complete in Bihar, and subsequent removal by the purchaser does not convert it into an inter-State sale.
Relied on decisions reported at AIR 1976 Supreme Court 1016 and AIR 1976 Supreme Court 410 (i.e., Manganese Ore (India) Ltd. and Balabhgas Fulaschand) to support the position that a "concluded sale" must take place in the State where the goods have moved for the transaction to be treated as inter-State sale; argued that the present facts do not fulfil that third condition.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Union of India v. M.G. Khosla & Co. Ltd. (AIR 1979 SC 1160)	Held that it is not necessary that the contract of sale itself provide for and cause movement of goods; a sale is an inter-State sale if it occasions movement from one State to another; property passing is immaterial to characterising inter-State sale.	The court relied on the principle that movement occasioned by or incident to the sale can render the sale inter-State; quoted the decision to support the view that inter-State character does not depend on where title passes but on whether the sale occasions movement.
English Electric Company v. Deputy Commercial Tax Officer (AIR 1977 SC 19)	Explained that decisive factor is whether the sale occasions movement of goods from one State to another; such movement may be the result of an express or implied covenant or an incident of the contract; it is not necessary for the covenant to be specified in the contract.	The court invoked this passage to support the proposition that the permit and surrounding facts could constitute the incident or covenant leading to inter-State movement, so the sales could be treated as inter-State sales under section 3(a).
Tata Iron & Steel Co. Ltd. v. S.R. Sarkar (AIR 1961 SC 65)	Recognised that movement of goods from one State to another can be the result of a covenant or an incident of the contract of sale.	Referenced to show that contractual incident or covenant can render movement an outcome of the sale; used to support the view that explicit wording in the contract is not the sole determinant.
Oil India Ltd. v. The Superintendent of Taxes (AIR 1975 SC 887)	Observed that there is no necessity that the covenant regarding inter-State movement be specified in the contract itself for the sale to be in course of inter-State trade or commerce.	Cited to reinforce the proposition that inter-State movement can be an incident of the contract even if not spelled out in the contract document; the court relied on this to interpret the effect of permits and practices.
Manganese Ore (India) Ltd. v. Assistant Commissioner of Sales Tax, Jabalpur (AIR 1976 SC 410)	Part of a line of authority identifying conditions to be satisfied before a sale can be said to be in course of inter-State trade, including an interpretation of what constitutes a "concluded sale".	The Advocate General relied on this authority to argue that the present transactions did not satisfy the "concluded sale" requirement; the court analysed the phrase "concluded sale" from this and other cases and adopted an interpretation focused on where the buyer actually obtains complete control and disposal.
Balabhgas Fulaschand v. State of Orissa (AIR 1976 SC 1016)	Another authority describing conditions for a sale to be termed inter-State, including aspects of where the sale is concluded.	Relied on by the Advocate General; the court reviewed the interpretation of the "concluded sale" requirement in light of this decision and explained its own view of what "concluded sale" means (i.e., where seller no longer retains any control and buyer obtains right of disposal).

Court's Reasoning and Analysis

The court framed the legal enquiry under section 3(a) and section 9(1) of the Central Sales Tax Act: whether the sale "occasioned the movement of the goods" from Bihar to Uttar Pradesh or Orissa. The court limited its consideration to section 3(a) (excluding section 3(b) and its explanation as not bearing on these matters).

The court reviewed authorities holding two related propositions: (a) a sale is an inter-State sale if it occasions movement from one State to another, and (b) it is not necessary that the contract expressly state such a covenant — the movement may be an incident or result of the contract. The court cited and relied on Union of India v. M.G. Khosla, English Electric, Tata Iron & Steel, and Oil India to articulate that the definitive test is whether the sale occasioned inter-State movement, not where property in the goods passed.

The Advocate General relied on decisions (Manganese Ore and Balabhgas) emphasizing a "concluded sale" requirement, contending that the sale here was concluded in Bihar (price paid and delivery order handed over). The court scrutinised this apparent conflict and interpreted "concluded sale" in those authorities as referring to the place where the purchaser actually obtains complete control, possession and the right of disposability over the goods — i.e., where the seller retains no authority to interfere with the commodity.

Applying the facts, the court observed that by contract and as an incident of the transaction (including the permits issued under the Forest Rules):

Permits specified route and destination and were required for removal under the Forest Rules, making the permit part of the sale arrangement.
The agreements prohibited transfer of delivery orders, railway receipts or other documents of title and required vehicles to be registered with the seller; the seller retained supervisory control and prescribed conditions for movement.
The buyers did not obtain an immediate, unfettered right to use or dispose of the goods while still in Bihar; appropriation and right of disposal occurred at the destination State (U.P. or Orissa) where goods were taken pursuant to the permit and where the buyer could appropriate the goods for manufacture or use.
Practically, the parties had conducted transactions on this basis for decades and earlier administrative opinions (Joint Commissioner, Commercial Taxes, Ranchi and Chief Conservator of Forest letters) had taken the position that registered out-of-State dealers producing Form C should be liable to CST.

Based on the foregoing, the court concluded that the sale occasioned movement from Bihar to another State and that the transaction came to a close at the destination State where the buyer obtained full control and the seller ceased to have control — thus satisfying the test in section 3(a) of the Central Sales Tax Act. The court rejected the Advocate General's contention that the mere handing over of delivery order or payment in Bihar made the sale concluded in Bihar for taxation purposes; it clarified the proper meaning of "concluded sale" as used in prior authorities.

Holding and Implications

Holding: The writ petitions are allowed; the Court holds that the sales in question are sales in course of inter-State trade or commerce within the meaning of section 3(a) of the Central Sales Tax Act.

Direct consequences and orders:

The respondents are directed not to demand or realise Bihar Sales Tax in respect of transactions of this kind from the petitioners (i.e., similar transactions where facts and contractual/permit terms are as described).
The respondents should refund or adjust State tax already realised from any of the petitioners if such tax was collected on sales that are found to be inter-State transactions in accordance with law.
The State Trading Corporation is directed to refund the security amounts held on account of such tax demands, if they are held solely for that purpose and not otherwise required.
The court acknowledged that the State Trading Corporation had correctly realised Central Sales Tax earlier on some of the transactions in question.
The court refrained from awarding costs because the cases posed intricate questions of law.

Broader implications: The opinion interprets "concluded sale" to mean the State where the buyer obtains complete control and disposability and clarifies that a sale is in course of inter-State trade if it occasions movement to another State by express or implied covenant or as an incident of the contract. The judgment applies those principles to the facts before the court; it does not purport to lay down additional ad hoc rules beyond the legal reasoning explained above.

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D.R Garg And Company (In C.W.J.C Nos. 1143 And 1194/83 (R)) v. The Indian Wood Products Co. Ltd. (In C.W.J.C No. 1411 And 1463/83(R))

S.B Sanyal, J.:— In view of the fact that the questions involved in all these four writ petitions are common, they were heard together and are being disposed of by a common judgment.

2. The simple question involved in all these writ petitions is whether the purchase of khair Billets and/or forest products from the Forest department in the State of Bihar constitute sale within the State of Bihar or in course of inter-State sale, liable to payment of the Central Sales Tax at the rate of 4 per cent on filing of a declaration in form ‘C’.

3. The petitioners are either companies or firms registered under the Central Sales Tax Act and carrying on manufacturing business outside the State of Bihar. The petitioner in C.W.J.C Nos. 1411 and 1463 of 1983 (R) are the manufacturer of Khair in their factory at Izatnagar, Barrelly in the State of Uttar Pradesh and are registered as well under the Uttar Pradesh Sales Tax Act. They have no place of business in the State of Bihar nor do they manufacture any Katha within the State of Bihar out of Khair billets and/or Khair woods purchased by them. It is stated that the said goods are purchased for consumption in their factory at Izatnagar (U.P). They are outside the State dealers.

4. The petitioners in C.W.J.C Nos. 1143 and 1194 of 1983 (R) similarly carry their business of timber goods at their place of business at Rourkela in the State of Orissa. It is said that they are registered under the Orissa Sales Tax Act as well as registered under the Central Sales Tax Act. They also claim to have no other place of business in the State of Bihar nor do they carry on any business in the said goods within the State of Bihar and similarly outside the State dealers.

5. In all the four writ petitions system and course of business and purchase transaction are same or similar viz., either by calling tender or by auction. It may be stated here that so far as C.W.J.C No. 1413 of 1983 (R) is concerned, the sale is by inviting tenders. In C.W.J.C No. 1463 of 1983 (R), it is partly by tender and partly by auction, whereas, in C.W.J.C Nos. 1194 and 1143 of 1983 (R), the purchases have been made by auction sale. In C.W.J.C Nos. 1411 and 1463 of 1983 (R) the contract of sale have been annexed which inter-alia provides that the buyers shall pay sales Tax or any other tax and Cess as applicable, on the Khair billets in Bihar. It further provides that the security deposit shall be liable to be adjusted against any outstanding dues of the corporation and shall also be liable to be forfeited by the Corporation for breach of any of the terms and conditions of the agreement. It also provides that there should be authorised representative of the successful tenderer to take delivery of the produce which will be marked after the sale is concluded and the property mark of the buyer will have to be registered in advance with the Corporation. Clauses 13 and 14 being relevant for the purpose of this writ petitions are quoted hereunder:—

“Clause 13: The delivered produce will be transported duly covered by permit issued by the Corporation and routed through Check posts prescribed by the Corporation.

Clause 14: Trucks or carts engaged by the buyer for transport of delivered forest produce will be registered with the Corporation.”

6. The payment could be made whether ??? one lump sum or in instalment and buyer will lift proportionate quantity of produce of such payments. The instalments due can also be realised out of the security deposit. Clause 20 of the agreement provides that—

“That delivery order, railway receipt or any other document of title relating to the contract shall not be transferable”.

7. There is another agreement annexed to the writ petition which has been marked Annexure-2. One of the clauses of this agreement of sale provides that the buyer has to pay Sales Tax at the rate of 4%+1% agriculture market fee. It may be stated here that under the Forest Act, certain Rules have been framed knowe as Bihar Kasth Tatha Arya Van utpadan Abhivahan Ka Viniyaman Niyamawalia, 1973 (For short’ the Rules). According to Rule 3 of the said Rules, the forest produce including katha cannot be exported or removed without a written permit issued by the competent Forest officers. Clause ‘G’ of Rule 3 of the aforesaid Rules provide that each permit shall mention the route and destination through which the forest produce is required to be carried. It will, therefore be evident that the permit referred to in clause 13 of the agreement relates to the grant of this permit showing the route and destination of the goods as required under Rule 3 of Clause ‘G’. This permit, therefore, forms part of the agreement for sale.

8. In C.W.J.C Nos. 1194 and 1143 of 1983 (R), it has been stated that the petitioner-company is purchasing katha logs or billets for the last 45 years in the same and similar manner and moving the goods to the destination shown in the permit for manufacture of katha in their factory at Barrely where the goods are appropriated by them. The Forest department and/or the Corporation always realised Central Sales Tax because the sale occasioned the movement of goods from the State of Bihar to Uttar Pradesh as per contract or incident of contract for sale. Under the agreement, the petitioner cannot transfer either the delivery order or the railway receipts or the permits to any person and the terminus points of the movement of the goods will invariably be the destination, indicated in the permit itself. Illustrative railway receipts and permits have also been enclosed to show the course and close of transaction.

9. In C.W.J.C Nos. 1194 and 1143 of 1983 (R) on striking of the hammer in the auction to the highest bidder and on payment of price and sales tax, the Forest department issued release order in consonance with the permit as required to be issued under the Rules indicating the route and destination where the goods are to be moved consequent upon the sale. In every case release orders and the transit permits have been issued for a place in the State of Orissa where the goods have always moved pursuant to the sale and/or implied agreement of sale in the trucks and/or Vehicles mentioned in the transport permits. Disputes having been raised from time to time as to whether such transactions are liable to the Bihar Sales Tax or the Central Sales Tax, the matter was clarified by the Chief Conservator of Forest by referring it to the Joint Commissioner, Commercial Taxes, Ranchi, who by his letter dated 22.3.1982 (Annexure-4) clarified that the dealers from outside the State are liable to pay 4% Central Sales Tax if they are registered under the same in those States and he submitted a declaration in Form ‘C’. In case such dealers are not registered in the State of destination under the Central Sales Tax Act, if any, they would be required to pay 11% State Tax as was applicable at that time. It is said that after the said clarification, the controversy was set at rest. The controversy having again arisen at the instance of the revenue authority, the matter was referred to the Chief Consevator of Forest who by letter no. 833 dated 16.6.1983 (annexure-6) intimated the concerned officer that Central Sales Tax at the rate of 4% shall be payable by the registered dealers if the goods have been taken outside the State of Bihar on furnishing Form C according to the decision the revenue as per their letter no. 318 dated 22.3.1982 and letter no. 253 dated 25.3.1982 It was further made clear if the goods have not moved outside the State of Bihar and/or not despatched outside the State of Bihar, the State Sales Tax should be leviod on such sales. In these writ petitions, the petitioners have also annexed all the permits covering the purchase transaction which show that the destination point of goods is Rourkella, a place in the State of Orissa. The permit for movement of goods also mentions the truck number and the name of the driver of the truck etc. I may also state here that in C.W.J.C No. 1411 of 1983 (R), the petitioner has annexed a letter (annexure-6) written by the Chief Conservator of Forest to the Conservator of Forest to realise only Central Sales Tax form the petitioner. It mentions that this is according to the written advice rendered by the Joint Commissioner, Commercial Taxes, Ranchi.

10. The immediate cause of action in C.W.J.C No. 1411 of 1983 (R) is refusal of respondent no. 2 to release the security deposit on the assumption that even thought the petitioner is liable to pay Bihar Sales Tax, what have been realised from him is the Central Sales Tax. Therefore, the difference is liable to be adjusted out of security money in deposit with the seller. In writ petition C.W.J.C No. 1463/83 (R)t the cause of action being realisation of Bihar Sales Tax paid on protest and further the rest and demand to relise State Tax on every transaction of khair wood or billets treating the sale to have concluded within the State of Bihar irrespective of the goods immediate movement outside the State. In C.W.J.C No. 1411 of 1983 (R), the petitioner seeks direction to release the security amount as well as issuance of a writ of mandamus directing the respondents to forbear from demanding the Bihar Sales Tax with respect to khair bill/wood purchased and moved outside the State and to treat the transaction to have taken place in course of inter-State trade and commerce. In C.W.J.C No. 1463 of 1983 (R), the petitioner seeks an additional relief that is to refund the Bihar Sales Tax charged from the petitioner on such inter State transaction. In C.W.J.C No. 1194 of 1983 (R), the petitioner seeks quashing of annexure 9, a demand by the Divisional Forest officer for payment of Bihar Sales Tax and in C.W.J.C no. 1143/83(R)’ the petitioner seeks quashing of annexure-5. In both the writ petitions, the further prayer of the petitioners is to restrain the respondents from demanding Bihar Sales Tax with respect to the sates pursuant to which She goods from the State of Bihar to outside the State.

11. Mr. Gadodia appearing on behalf of C.W.J.C Nos. 1411 and 1463 of 1983 (R) contended that there is a denial of the factual part stated in paragraph 15 of the writ petition that the goods have moved from the State of Bihar to Uttar Pradesh for being consumed in the petitioners factory and the petitioner did not dispose of the khair Billets in the State of Bihar. In paragraph 11 of the counter affidavit which is in reply to paragraph 15, what has been stated is that:—

“the liability of the petitioner to pay Bihar Sales Tax at 11% did not cease in view of Clause-5 of the agreement which states that the buyer will have to pay sales tax etc. applicable in Bihar on sales of khair billets.”

12. Learned counsel for the petitioner states that goods having moved consequent upon agreement of sale as per permit indicating the destination or place in State of U.P, would be a sale occasioning the movement of goods to another State, thus within the four corners of section 3 of the Central Sales Tax Act. This is a sale in course of inter-State trade or commerce. He further submitted that it is wholly irrelevant as to where the title to the property of the goods passed in one State or another, in as much as it may pass in either of the State and the sale can yet be inter-State sale. Learned counsel for all the writ petitioners further submitted that invariably, all the goods purchased have moved outside the State either for manufacturing or for trading purposes in other State where the petitioners are registered dealer of that State. Under the agreement, none of the purchasers are entitled to transfer delivery order, railway receipts or any other document of title relating to the goods of sale. The goods can only be appropriated to purchaser's use at the destination point shown in the permit which is either in the State of Uttar Pradesh or the State of Orissa. Learned counsel submitted that this fact is borne out by the Forest transport permit issued by the seller and no one is permitted to move the goods in violation of the requirement of the permit and if any body does so, he is liable to criminal prosecution under clause 8 of the Rules. It has also been stated that the forest department is the authority who grants permits and, therefore, it is within their knowledge, that the goods are meant to move from the State of Bihar either to U.P or to Orissa. The seller is further aware that the petitioners are outside the State dealers registered under the Central Sales Tax Act as well as under their State Sales Tax where they have their principal seat of business. In support of their submission, learned counsel for the parties relied upon large number of cases but mainly to the case of Union of India v. M.G Khosla and Co. Ltd. (AIR 1979 Supreme Court, 1160) as well as the case of English Electric Company v. Deputy Commercial Tax Officer (AIR 1977 Supreme Court, 19).

13. Mr. Ram Balak Mahto, learned Advocate General submitted that everything said and done, the sale has been concluded within the State of Bihar, therefore, the transactions are liable to the payment of Bihar Sales Tax Act. The real test according to the learned Advocate General is, whether a particular sale, is in course of inter-State trade or sale within the State, is where the sale was concluded. In the instant case after the concluded safe took place within the State, the goods have moved to the other State, therefore, the sale could not be deemed to be in course of the inter-State trade and commerce. In support of his argument, he strongly relies upon the decisions reported in AIR 1976 Supreme Court, 1016 and AIR 1976 Supreme Court, 410.

14. I am required to consider in the light of section-3(a) and Section 9(1) of the Central Sales Tax Act (74 of 1956) (hereinafter to be referred to as ‘the Act’) whether the sale effected by the respondents occasioned the movement of the goods from one State to the other viz., from the State of Bihar either to the State of U.P, or to the State of Orissa. If the sale or purchass occasions the movement of goods from one State to another, only then sale can be deemed to have taken place in course of inter-State trade or commerce within the meaning of the Act. In this case, I am not concerned as to the applicability of section 3(b) of the Act and/or the explanation to the section, as they have no bearing in these cases. If the contract of sale provides for and caused movement of the goods or the movement of goods is occasioned specifically in accordance with the terms of the contract of sale, in that event, it would be a clear case of sale or purchase in course of inter-State trade or commerce. There may, however, be cases as well in which the movement of goods from one State to another is the result of “covenant or incident of the contract of sale”. (Tata Iron and Steel Co. Ltd. v. S.R Sarkar AIR 1961 Supreme Court, 65). Justice Mathew observed in the case of Oil India Ltd. v. The Superintendent of Taxes (AIR 1975 Supreme Court 887) that there is no necessity that the covenant regarding inter-State movement shall be specified in the contract itself regarding the inter-State movement of goods, for being sale or purchase in course of inter-State trade or commerce. In the case of Union of India (supra) Justice Chandrachud speaking for the Court stated the law as hereunder:—

“It is not true to say that for the purpose of Section 3(a) of the Act it is 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 specifically in accordance with the terms of the contract of sale”.

“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 section 3(a) of the Act”……

“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-State sale or an intrastate sale, does not depend upon the circumstances as to in which State the property in the goods passes. It may pass in either State and yet the sale can be an intra-State sale”.

15. In the case of English Electric Company v. Deputy Commercial tax Officer (AIR 1977 Supreme Court-19), Ray C.J stated the law with respect to the sale in course of the inter-State sale as follows:—

“It does not matter in which State the property in the goods passes. What is decisive is whether the sale is one which occasions the movement of goods from one State to another. The inter-State movement must be the result of 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 is in pursuance of and incidental to the contract of sale”.

16. These are the passages which have been strongly relied upon both by Mr. Kameshwar Prasad as well as Mr. Gadodia, learned counsel appearing for the petitioners. They contend that the permit is a part of the contract of sale. It provides the movement of the goods from one State to another specifically in accordance with the terms of the permit, therefore, their cases are straightway covered by section 3(a) of the Act. Alternatively, they contend that there could be no doubt in view of the facts and circumstances of the case and the admitted movement of the goods to the knowledge of the seller from one State to another, movement of the goods is the result of the incidence of the sale or contract of sale. The buyer is entitled to appropriate the goods and acquire disposable right over the goods purchased, only in the State where the goods have finally moved to the knowledge of the seller. According to the learned counsel, it is immaterial whether title to the goods passes in one State to another, whereas, learned Advocate General submits that even though the transaction fulfils two conditions as laid down in the case of Manganese Ore (India) Ltd. v. Assistant Commissioner of Sales Tax, Jabalpur (AIR 1976 Supreme Court 410) and Balabhgas Fulaschand v. State of Orissa (AIR 1976 Supreme Court, 1016) before a sale can be said to have taken place in the course of inter-State trade or commerce, but it do not fulfil the 3rd condition laid down in the aforesaid two cases, which required the “concluded sale” to take place in the State where the goods have moved which must be different from the State from where the goods had moved. Learned Advocate General submits that the sale in the State of Bihar was a concluded one, inasmuch as the goods were purchased and price thereof paid and delivery order was handed over to the purchaser in the State of Bihar. The purchasers moving the goods thereafter at his discretion to another State is irrelevant consideration in this regard. According to Advocate General, it is not a case therefore, that the sale occasions the movement of the goods from one State to another. At the first impulse, I was of the opinion that there is an apparent conflict in the decisions cited by the learned counsel for the parties, as to the test laid down to determine sale in course of inter-state trade and commerce, inasmush, as the statement of law to the effect. It does not matter in which State the property in the goods passes “vis a vis observation of the Supreme Court that ‘the concluded sale takes place’ in the State where the goods had ultimately moved.” On deeper scrutiny, I am of the opinion that it is not so what their Lordships of the Supreme Court really means is, in which State the transaction of sale and purchase ultimately closes and the purchaser is entitled to appropriate the goods to itself with either right of disposability and/or to put it to their use and that State must be the State where the goods have moved to constitute sale in course of inter-State trade or commerce. The use of the word where “a concluded sale takes place” in my opinion, means where the purchaser factually obtains complete control and possession of the goods and the transaction in all its aspect comes to an end. Close of transaction would mean that the seller retains no authority whatsoever to interfere with the purchaser commodity qua the goods purchased”. It may be, the property in goods passed in purchasing State; but if the seller retains complete control of the movement of goods purchased with no right of the purchaser likes and that being the incident of contract, it cannot be deemed to be a concluded sale in the State, where the goods have been purchased.

17. Let us now have a close look to the facts and circumstances of the cases in hand. In view of the agreement oral or written, and/or as incident of the aforesaid contract, the purchasers were not at all entitled to have any personal volition with respect to the goods and/or right to use it in the State of Bihar. Further, the purchasers did not obtain complete right to the property purchased immediately on purchase of goods in the State of Bihar as they were not entitled to transfer title to the goods purchased to any person, in the State where the goods were purchased, but obtained the said right at the destination State, mentioned in transport permit where the goods have moved to the knowledge of the seller viz., the other State. Therefore, the title and possession of the goods with right of disposal or usurpation arose only in the State where the goods had moved pursuant to the contract of sale and/or as an incident of the said contract. The transaction of sale and purchase came to a close at the destination State, indicated in the permit. This position obtained, both in the written agreement of sale and/or could be culled out from the permit issued by the seller. It mandates the purchaser to move the goods in vehicles registered with the seller, to be taken to the State of Orissa or in the State of Uttar Pradesh through a particular route. The seller keeps control and supervision over the goods purchased and its movement, even though the title to the goods passes in the State of Bihar till the goods move out from the State and reaches the destination State. The factual delivery of the goods with right of disposability, therefore, occurs in the State of Uttar Pradesh and/or Orissa persuant to the purchase made in the State of Bihar. In my opinion, the sale is concluded and/or the transaction of sale and purchase comes to an end in the State where the goods had moved. This has been the course of trade and business between the respondent-seller and the purchasers, obtaining more than a decade. The Joint Commissioner, Commercial Taxes, Ranchi had opined as far back as in the year 1982 that the transactions are covered under section 3(a) of the Act. In spite of that the revenue as alleged from time to time wakes up and vexes the petitioners in my opinion, by misconstruction of the third requirement stated in the Maganese ore (India) Ltd. (Supra) and Balabbgas (Supra) As I have stated earlier, the word “concluded sale” only means where the seller ceases to have any control over the goods sold, and the buyer is at liberty to appropriate the goods to its own use, that is where the transaction of sale and purchase comes to a close.

18. For the reasons stated above, I am of the opinion that the instant sale and purchase is in course of inter-State trade and commerce and is completely covered under section 3(a) of the Act.

19. In the result, the writ petitions are allowed and the respondents are directed not to demand and/or realise Bihar Sales Tax in these kind of trade and commerce from the writ petitioners. The respondent should refund or adjust it in accordance with law, if some such sale or purchase is found to have been subjected to State tax and the same have been realised from any one of the petitioners. The State Trading Corporation should refund the security amount of the petitioners if held by them on this account and not otherwise required. It is needless to say that the State Trading Corporation had correctly realised earlier Central Sales Tax from some of the transaction in question.

20. As the cases posed intricate question of law, I refrain from passing any order of costs.

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