BALABHAGAS HULASCHAND versus STATE OF ORISSA

Citation: [1976] 2 S.C.R. 939 · Decided: 09-12-1975 · Supreme Court of India · Bench: KUTTYIL KURIEN MATHEW · Disposal: Dismissed
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Judgment (excerpt)

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BALABHAGAS HULASCHAND 
v. 
STATE OF ORISSA 
December 9, 1975 
(K. K. MATHEW AND S. MURTAZA. FAZAL ALI, JJ.J 
939 
Central Sales Tax Act, 1956-Ss. 2(g), 3, 4(2) (a) (b )-"Sale"-Ambit of 
the definition "Sale". 
i 
Central Sales Tax Act, 1956-Section 3 (a) read with s. 4 
of the 
Sale 
of Gdods Act, 19,30-Agreement to sell is an essential ingredient of sale.-
Central Sales Tax Act, 1956, s. 3(a)-Scope of s. 3(a)-Occosions the 
"movemelll of goods from one State to another" -Whether the agreement of sale 
A 
B 
occasions movement-W/1etha agreeme11t to sell was a forward co11tract or a con-
C 
tract i11 respect of unascertainable or future goods does not make any differ-
e11ce, for the purposes of application of s. 3 (c•) of the AC/. 
Interpretation of statutes-Whether s. 3(a) of the Central Sales Tax 
Act i~ redundant and wouid apply to contingencies which may 11ot happen at 
'all. 
Central Sales Tax Act. 1956-Section 3(a) 
read 
with 
Art. 286(3) 
of ihe Constitution of l11dia-Sale "in the "ourse of interstate trade or com-
D 
mcrcc"-Conditions to' be satisfied before a sa!e can be said to take place in 
the course of interstate trade or con1merce. 
The appellant, a firm dealing in buying and selling jute with headquarters at 
Calcutta, used to purchase raw jute grown in Orissa and despatch them in bags 
from Cuttack and Dhanmandal Railway Station to the Railway Mills Siding 
StatiOJJ in Calcutta. 
The goods were booked in the name of the buyer "KB 
& Co" through its licenced broker "EU & HE Ltd." and on the arrival of the 
goods the buyer inspected the goods and if they were found in accordance with 
the specifications mentioned in the agreement of sale, accepted them and paid 
their price. On the basis of these concluded transactions of sale th'e respond-
ent State, levied sales tax under s. 3 (a) of the Central Sales Tax Act on the 
basis tjiat the sales were interstate sales. 
Since the assessing authorities negativ-
ed the contention of the appellant that the sale was merely an internal sale which 
took place in the State of West Bengal and since the Tribunal refused to make 
a reference, the appellant moved the High Court under s. 24 ( 3.) or the Orissa 
Sales Tax Act to direct the Tribunal to make a statement of the case to the 
High Court. The Tribunal referred two points, viz., (il Did the title to the 
goods pass in Oxissa or in West Bengal and (ii) Even if the title in the goods 
passed in West Bengal, whether in the facts and circumstances of this case, 
the transaction constituted "s-ale in the course of inter-state trade" ? The High 
Court held that although the title in the goods passed in West Bengal and the 
sale took place there, since the sale occasioned the movement of goods from 
Orissa to West Bengal it was an inter-State sale, and, therefore, it was clearly 
governed by s. 3 (a) of the Central Sales Tax Act. 
Affirming the judgment of the High Court and dismissing the appeals by 
' 
special leave, the Court, 
HELD: (1) The definition of "sale" in s. 2(g) of the Central Sales Tax 
Act postulates the following conditions. (i) There must be a transfer of 
property in goods by one person to another; (ii) The transfer must be for cash 
or for deferred payment or for any other valuable consideration; and (iii) That 
such a transfer include~ a transfer of goods on' the hire .purchase or oth6r sYstem 
of payment by instalment etc. The word "sale'' defined in cl. (g) of s. 2 and 
used in s. 3(a), 4(2) (a) and (b) is wide enough to include not onlv a con-
cluded contract of sale but also a contract or agreement of sale provided the 
agreement of sale stipulates that there was a transfer or property or movement 
5-277 SCI/76 
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940 
SUPREME COURT REPORTS 
[1976] 2 S.C.R. 
A 
of goods. 
An agneement to sell by which the property did not actually pass 
was also an element of sale. 
[944H, 945A, C, Gl 
Bengal Immunity Co. Ltd. v. The State of Bilwr and others, [1955] 2 SCR 
603, relied on. 
Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash, 5 S.T.C. 193, 196, 
followed. 
B 
(2) When the statute uses the words "sale or purchase of goods", it auto-
c 
D 
E 
F 
G 
H 
matically attracts the definition of "sale of goods" as' given in s. 4 of the Sale 
of Goods Act, 1930, and is to some extent pari materia to s. 3 of the Central 
Sales Tax Act so far as the transactions of sale is concerned. 
'The inevitable 
conclusion that fellows from the combined effect of the interpretation of s. 3 
of the
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