ENGLISH ELECTRIC COMPANY OF INDIA LTD. versus THE DEPUTY COMMERCIAL TAX OFFICER & ORS.

Citation: [1977] 1 S.C.R. 631 · Decided: 21-09-1976 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed
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Judgment (excerpt)

631 
ENGLISH ELECTRIC COMPANY OF INDIA LTD. 
v. 
THE DEPUTY COMMERCIAL TAX OFFICER & ORS. 
Septembler 21, 1976 
[A. N. RAY, C.J., M. H. BEG AND P. N. SHINGl-li\L, JJ.J 
Sale-Contmct for sale of goods, whether inter-State sale or i11tra-S111te rnlc--
l11gredie11ts-Ce11tral Sales Tax Act-Section 3 (a). 
Privily of c·ontract-When a company has sereral branches and there is a 
col11ract between the buyer and one of the branches, the contract of sale is 
bet1vee11 rhe company and the buyer. 
The appellant company having its registered office at Calcutta, with branches 
at Bombay, Delhi, Lucknow, has a principal factory-cum-branch at Madras. 
The regi,tered office and the various branches are registered as dealers both 
under the Central Sales Tax Act and the local Sales Tax Acts. 'fhe appellant 
company in respect of the assessment year 1965-66, did not include a sum of 
Rs. 21.88,540.41 in its turnover in the return filed under the Central Sales Tax 
Act on the ground that the turnover represented sales outside the State of 
Madras. 
The said sale related to a Bombay buyer who placed the order with 
the Bombay branch of the appellant company after it was informed l'Y the said 
branch in consultation with the Madras branch factory that the price was f.o.r. 
Madras at the buyer's risk and that the delivery· would be ex-works, Madras. 
The Bombay buyer was also informed by the Bombay branch of all the parti-
culars, condition of sale, the fact that the good~ would be manufactured at the 
Madrns branch factory and would be supplied by the Madras Branch etc. as 
advised by the Madras branch to the Bombay brartch. 
The respondent treated 
it as inter-State sale under s. 3 (a) of the Central Sales Tax Act and issued a 
notice of demand whereupon the appellant filed an application under Art. 226 
of the Constitution in the Madras High Court praying for a writ of Prohibition 
restraining the respondents from taxing and/or including in the turnover for 
the purposes of assessment for the year 1965-66. 
The 
said 
petition 
was 
dismissed. 
Dismissing the appeals by certificate. the Court. 
HELD : (I ) 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. It 
does not matter in which State the property in the goods passes. 
What is 
decisive is whether the sale is one which occasioned the movement of goods from 
one State to another. 
The inter-State movement must be the result of a 
covenant, exl)ress 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 mter-State trade or commerce, that the covenant regarding inter-Stale move-
me'1t must be specified in the contract itself. It will be enough if the movement 
is in pursuance of rnd incidental to the contract of sale. 
[6340-E] 
(2) Branches have no independent and separate 
~ntity. 
Branches 
different agencies. 
Jn the instant case, the contract of sale is 
between 
appellant company and the Bombay buyer. [634C] 
Civ1L APPELLATE JURISDICTION : Civil Appeal No. 
1838 
1969. 
Writ Petition Nos. 483-487 of 1974 
are 
the 
of 
(From the Judgment and Order dated 2nd August 1968 of the 
Madras High Court in Writ Petition No. 416/67). 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
E 
632 
SUPREME COURT REPORTS 
[ 1977] 1 S.C.R. 
Civil Appeal No. 608 of 1973 
(From the Judgment and Order dated 11th April 1972 of the 
Madras High Court in T~x Case No. 44/72). 
K. S. Ramamurthi, V. Nataraj, C. Natarajan and D. N. Gupta for 
the appellant/petitioners. 
S. T. Desai for RR. 1 & 2 in CA 1838/69 and Writ petitions. 
.. -(-. 
A. V. Rangam and Miss A. Subhashini, for respondents in CA 
;.._
.608/73. 
S. N. Prasad, R. N. Sachthey and Girish Chandra, for R. 3 in CA 
1838 of 1969 and Writ petitions. 
D. N. Mukherjee, G. S. Chatterjee and D. P. Mukherjee, for res-
pondent No. 4 in writ petitons. 
S. C. Manchanda and 0. P. Rana, for respondent No. 5 in Writ 
petitions. 
M. C. Bhandare and M. N. Shroff, for respondent No. 6 in Writ 
petitions. 
The Judgment of the Court was delivered by 
RAY, C. J. 
These two appeals by certificate and the writ peti-
tions turn on the question whether the contract for sale of goods was 
an inter-State sale or an intra-State sale. 
The appellant is a company ha
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