LexSTATE OF BIHAR & ANR. versus TATA ENGINEERLNG & LOCOMOTIVE CO. LTD.
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A c D F H 849 STATE OF BmAR & ANR. v. TATA ENGINEERlNG & LOCOMOTIVE CO. LTD. November 27, 1970 [J. c. SHAH, G. K. MITTER, K. s. HEGDE, A. N. GROVER AND A. N. RAY, JJ.] Constitution of India, 1950, Art. 286(2) as it originally· stood-En 1he course of inter-State f.rade or co1nn1erce, nieaning of, The assessee, having its registered office in Bombay and its factory in Bihar, was ca!Tying on the business of manufacturing and selling trucks, bus chassis and spare parts to their appointed dealers and others. Agree- ments were entered into between the assessee and the appointed dealers, under which, each dealer was assigned a territory in which alone the dealer could sell. 1be dealers had to place the indents, pay the price of g<>ods to be purchased and o&tain delivery orders from the Bombay office. In pursuance of the delivery orders the trucks etc. were delivered in Bihar to be taken to the territories assigned to them for sale there. If the dealers failed to abide by the term requiring them to move the goods outside the State of Bihar they would have committed breach of their contracts. On the question whether the turnover relating to the sales made by the a'ssessee to its dealers for sale by them in their respective territories outside the State of Bihar, during the period 7th September 1955 to 31st March 1956, was exempt from liability to pay sales-tax under the Bihar Sales Tax Act, on the ground that the sales took place in the coutse of inter-State trade or commerce, under Art. 286(2) as it then stood. HELD : Where under the . terms of a contract of sale, the buyer is required, as a nec~ssary lmcident of the con!Tact, to remove the goods frum the State in which he purchased the goods to ano)her State and when the goods are so removed, th.e sale must be considered as a sale in tire course of inte!r-State trade or commerce. [854 G-H; 858 A·lll State of Travancore Cochin v. The Bombay Co. ·Ltd. [1952] S.C.R. 1112, Str.te of Travancore Cochin v. Shanmugha Vi.al Cashew Nut Fac- tory, [1954] S.C.R. 53, Bengal Immunity Co. Ltd. v. State of Bihtll', [1955] 2 S.C.R. 603, Endupuri Narasimham & Son v. State of Orlua, [1962] 1 S.C.R. 314, 'Tala Iron & Steel Co. Ltd. v. S. R. Stll'kar, (1961] I S.C.R. 379, The Cement Marketing Co. of India (P) Ltd. v. Stale of MyJort, 14 S.T.C. 17~, ~Ben Gorm Nilgiri Plantations Co. v. Sales .Tax Officer, Special Circle, Ernakulam, (1964] 7 S.C.R. 706, K. G. Khosla & Co. (P) Ltd. v. Dy. Commissioner of Commercial Taxes, Madras, 17 S.T.C. 473 and Tata Engineeri~g & Locomotive Co. Ltd. v. Asstt. Com- mi.«itmer of Commercial Taxes & Anr. [1970] 1 S.C.C. 622, applied. Coffee Board, Bcnga/ore v. Joint Commercial Tax Officer, Madras. 15 S.T.C. 528, explained. CML APPELLATE JURISDICTION: Civil Appeal No. 2402 of 1966. 12-l694SupCl/71 850 SUPREME COURT REPORTS [1971] 2 S.C.R. Appeal by special leave from the judgment and order dated A May 4, 1966 of the Patna High Court in Misc. Judicial Case No. 284 of 1962. A. K. Sen and U. P. Singh, for the appellants. N. A. Palkhivala, S. B. Mehta, B. Datta,. for the respondent. B The Judgment of the Court was delivered by. Hegde, J. This is an appeal by special leave: It arises from the judgment of the High Court of Patna in a Reference under s. 25(3) of the Bihar Sales Tax Act, 194 7. That reference was called for by the High Court at the instance of the assessee company (the c respondent herein). The questions referred for the opinion of the High Court by the Board of Revenue were : "(!) With regard to the sales which t9ok place in the period from !st of April, 1955 to the 6th September 1955, whether the assessee is entitled, upon the facts found by the Board of.Revemie D wiih regard to these categories of sales, to ex- emption from liability. under the Bihar Sales-Tax: Act because of the provision of Article 286(1) (a) of the C9nstitution ,as it stood at the relevant date read with the explanation to that article. (2) Witih regard to the sales which t.ook place in the E period from 7th September, 1955, to 31st March, 1956 whether the assessee is entitled, µp- on the facts found by the Board of Revenue with regard to these categories of sales, to exemption from liability under the Bihar Sales-tix Act on the gr9\Jnd that the Sjiles took place in the course F . of inter-State trade or commerce under Art. 286(2) of the Cons~tUtion as it stood at the rl}- levant period.'~ The Hi
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