JUDGMENT
P.G. Agarwal, J.
1. This writ petition under Article 226 of the Constitution has been preferred by the Hindustan Paper Corporation Ltd., for short, the Corporation, whereby the order dated 23.12.1996 passed by the Deputy Commissioner of Taxes, Silchar Zone, Silchar has been challenged.
2. The facts, in brief, are that the Corporation procures bamboos from the various Districts of Assam and from the neighbouring States of Tripura and Mizoram for the purpose of manufacturing papers in the two units at Panchgram and Nagaon. The Corporation is registered under the Assam General Sales Tax Act and for the accounting year 1993-94 they submitted their returns and assessment was accordingly made by the Superintendent of Taxes, Hailkandi. Subsequently a notice was issued to the petitioner Corporation to show cause stating that in the assessment made earlier, there were some errors in the sense that freight was not included in the purchase price of bamboos which is in contravention of the provisions of Section 2(30) of the Assam General Sales Tax Act. The Corporation submitted their reply and after hearing, the impugned order was passed whereby the Deputy Commissioner of Taxes held : (1) that the element of transport charges/freight is to be included in the purchase price of the home grown bamboos/collected from the State of Assam. (2) So far the bamboos which are supplied by the suppliers from Mizoram and Tripura and delivered at the mill-gate within the State of Assam, it will amount to sale because delivery was effected in Assam and as such the same shall be liable to tax under the Assam General Sales Tax Act, for short the Act. The earlier order of assessment was accordingly set aside and the matter was remitted back for fresh assessment. Hence the present writ petition.
3. So far the inclusion of freight charges in the purchase price of bamboos or bamboos purchased from the State of Assam is concerned, Dr. A.K. Saraf, learned counsel for the petitioner submits that the petitioner Corporation does not dispute the above order. The sole governance of the petitioner is in respect of the bamboos purchased from Tripura and Mizoram, which have been treated as articles purchased within State although these being inter-state sale in view of the provision of Article 286 of the Constitution and Section 3(a) of the Central Sales Tax Act, the respondent authority has no jurisdiction or power to levy tax on such purchases.
4. The learned counsel for the petitioner submits that the orders were placed for supply of bamboos outside the State of Assam, namely the State of Mizoram and Tripura with the stipulated that delivery is
to be effected at the premises of the Corporation at Panchgram, Cachar. For supply and transportation of the bamboos from outside the State of Assam, the proof in support of the collection from outside the State of Assam has also to be accompanied with the Bill. Accordingly, the bamboos are transported and delivered at the Cachar Paper Mill. The above facts are not in dispute as we find from the impugned order that the concerned authorities were also satisfied from the documents on record that the bamboos were collected by the suppliers from different places of Mizoram and Tripura and transported to the mill-gate by the suppliers and delivered to the petitioner. The contention of the respondent State is that as the bamboos were delivered at Panchgram and till then the ownership of the bamboos were not transferred to the petitioner, the ‘sale’ shall be deemed to be a sale taking place in Assam and thereby it will not attract the provisions of Section 3(a) of the Central Sales Tax Act which reads as follows :-
“3. When is a sale or purchase of goods said to take place in the course of inter-state trade or commerce – A sale or purchase of goods shall be deemed to take place in the course of interstate trade of commerce if the sale or purchases –
(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.”
5. In a recent case of National Thermal Power Corporation Ltd. and Ors. v. State of M.P. and Ors., reported in 127 STC 280, the constitution Bench of the Apex Court had occasion to reconsider the entire gamut of the earlier decision with regard to inter-state sale and observed :
“It is well-settled by a catena of decisions of this court that a sale in the course of inter-state trade has three essential ingredients : (i) there must be a contract of sale, incorporating a stipulation, express or implied, regarding inter-state movement of goods ; (ii) the goods must actually move from one State to another, pursuant to such contract of sale ; the sale being the proximate cause of movement; and (iii) such movement of goods must be from one State to another State where the sale concludes. It follows as a necessary corollary of these principles that a movement of goods which takes place independently of a contract of sale would not fall within the meaning of inter-state sale. In other words, if there is no contract of sale preceding the movement of goods, obviously the movement cannot be attributed to the contract of sale. Similarly, if the transaction of sale stands
completed within the State and the movement of goods takes place thereafter, it would obviously be independently of the contract of sale and necessarily by or on behalf of the purchaser alone and, therefore, the transaction would not be having an inter-state element. Precedents are legion ; we may briefly refer to some of them. In English Electric Company of India Ltd. v. Deputy Commercial Tax Officer (1997) 1 SCR 631, this Court held that when the movement of the goods from one State to another is an incident of the contract it is a sale in the course of inter-state sale and it does not matter which is the State in which the property passes. What is decisive is whether the sale is one which occasions the movement of goods from one State to another.”
The Apex Court also observed that the prohibition which is imposed by Article 286(1) of the Constitution is independent of the legislative entries in Seventh Schedule. In another case of 20th Century Finance Corpn. case, reported in (2000) 6 SCC 12, the Apex Court held that if the transaction of sale satisfied any one of the two requirements of Section 3(a) and (b) it shall be deemed to be a sale of purchase of goods in the course of inter-state trade or commerce and by virtue of Articles 269 and 286 of the Constitution, the same shall be beyond the legislative competence of a State to tax.
6. As regards the statement in the impugned order that as the delivery of the bamboos took place at Panchgram, Cachar although the bamboos were moved from Tripura and Mizoram, the sale shall be a deemed sale in the State of Assam, the views observed by the Apex Court in 20th Century Finance Corpn. (supra) will be relevant and the same are quoted below:
“Further, the Sate Legislature cannot by law, treat sales outside the State and sales in the course of import as “sales within the State” by fixing the situs of sales within its State in the definition of sale, as it is within the exclusive domain of the appropriate Legislature, i.e., Parliament to fix the location of sale by creating legal fiction or otherwise. The majority has clearly opined that the State where the goods are delivered in the transaction of inter-state sale, cannot levy a tax on the basis that one of the events in the chain has taken place within the State ; so also where the goods are in existence and available for the transfer of right to use, there also that State cannot exercise power to tax merely because the goods are located in the State.”
In the case of National Thermal Power Corpn. (supra) the Apex Court further observed that if the reasons as suggested by the State are accepted treating the sale taking place in such State and delivery
was effected there, it may lead to double taxation both at the original station where the movement of goods takes place and at the place where the delivery has been effected and in the words of the Apex Court that would give rise to the same situation which was sought to be remedied by the Constitution in the 6th amendment.
7. In view of the above settled proposition of law, it is held that so far the purchase of bamboos from Mizoram and Tripura, the Corporation is not liable to pay tax under the Assam General Sales Tax Act as those are inter-state sale/transaction. The impugned order dated 23.12.1996 so far it relates to the above inter-state sale is concerned, for purchase of bamboos from Mizoram and Tripura, the same is hereby set aside. It is submitted that the tax at source was deducted from the suppliers Under Section 27 of the Assam General Sales Tax Act as a matter of abundant caution and the same was released to the suppliers on furnishing of bank guarantee/indemnity bond as per order of this court. As the tax is not leviable, there was no question of deduction of tax at source and as such the refund made to the suppliers is made absolute. The respondents will be at liberty to revise the assessment for 1993-94 by including the freight charges in respect of the home grown bamboos. In case, if any amount is still lying with the Corporation in respect of deduction of tax for purchase of bamboos from Mizoram and Tripura (inter-state purchases), the same may be refunded to the suppliers.
8. With the aforesaid observations and direction the writ petition stands disposed of.