ORDER
1. In this reference under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958 (hereinafter called the Act), at the instance of the Commissioner of Sales Tax, the question, which we have been asked to answer, is-
Whether, on the facts and circumstances of the case, the disputed sales of manganese amounting to Rs. 2,77,976.45 P. were sales in the course of inter-State trade and commerce or were intra-State sales ?
2. The assessee, Allwyn Cooper, who does the business of selling manganese, was assessed to sales tax under Section 18(3) of the Act for the period from 1st October, 1957, to 30th September, 1958, on his turnover of the sales of manganese of the value of Rs. 2,77,976.45 P. During the assessment proceedings, he claimed that this entire turnover was of sales in the course of export of manganese out of India, and that in any case the sales were inter-State sales and, therefore, not liable to be taxed under the Act. This objection was negatived by the taxing authorities. In second appeal, the Sales Tax Tribunal (the Board of Revenue), however, accepted the contention of the assessee that the sales were in the course of inter-State trade or commerce and, therefore, could not be assessed to sales tax under the local Act. On this view, the Sales Tax Tribunal remanded the matter to the Sales Tax Officer for assessment under the Central Sales Tax Act, 1956.
3. The Tribunal has found as a fact that the turnover of Rs. 2,77,976.45 P. was turnover of the sale of manganese by the assessee to M/s. Ram Bahadur Thakur & Co., Nagpur, M/s. Jyoti Bros, of Calcutta, and M/s. B. P. Khemka Private Ltd., Calcutta, under written agreements concluded between the assessee and the purchasers. Under the contract entered into with M/s. Ram Bahadur Thakur & Co., Nagpur, manganese ore was loaded into wagons at Katangjhiri railway-siding located in the State of Madhya Pradesh for being despatched to Gondia, in the State of Maharashtra, and the price payable by the buyer was F.O.R. Katangjhiri railway-siding. The agreement, however, contained the stipulation that the 'first net weight at Gondia weigh-bridge shall be final and binding on both the parties for the purposes of payments' and that the last balance payment of the price would be made 'by the buyers to the sellers after entire loading of the stock and on receipt of weight from Gondia weighbridge.' The agreement concluded between the assessee and M/s. Jyoti Brothers of Calcutta also contained a similar condition with regard to loading of ore and its despatch to Gondia, and the 'first weight of Gondia weigh-bridge' being the basis for final accounts. The sales to M/s. B. P. Khemka Private Ltd., Calcutta, were under two agreements, which inter alia provided for despatch of manganese ore to Vishakhapatnam Port and for payment of certain price by the buyers per long ton of the ore, which included railway freight from Katangjhiri railway-siding to Vishakhapatnam Port. Under one of these agreements, the last balance of the price of the goods was to be paid after the loading, weighing and despatch of the ore to the port. The other agreement made the last balance of the price payable after the receipt of the goods 'in the plots of the buyers at the port'. These stipulations about the despatch of ore to Gondia in two cases, and to Vishakhapatnam Port in the other two cases, leave no doubt that the transport of manganese ore from the State of Madhya Pradesh to Gondia and Vishakhapatnam outside the State was under the contracts of sale concluded between the assessee and the buyers. These sales were, therefore, clearly in the course of inter-State trade as pointed out by Venkatarama Ayyar, J., in Bengal Immunity Co. Ltd. v. State of Bihar [1955] 2 S.C.R. 603.
4. All these sales were during the period from 1st October, 1957, to 30th September, 1958. Before the commencement of this period, Article 286 of the Constitution was amended on 11th September, 1956, by the Constitution (Sixth Amendment) Act, 1956. By the amendment, the Explanation to the first clause of Article 286 was omitted, and for Clauses (2) and (3) the following clauses were inserted-
(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in Clause (1).
(3) Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.
By the Constitution (Sixth Amendment) Act, 1956, a new clause in Article 269 was also added giving to Parliament the power to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce. In order to carry into effect the conferment of this power, the Constitution (Sixth Amendment) Act inserted a new entry, entry 92A of the First List of Seventh Schedule, and amended entry 54 of the State List. In exercise of this power, Parliament enacted the Central Sales Tax Act, 1956, which came into force from 5th January, 1957. Section 3 of the Central Sales Tax Act, 1956, lays down that-
3. A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-
(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..
It has been held by the Supreme Court in Cement Marketing Co. v. State of Mysore [1963] 14 S.T.C. 175 and State Trading Corporation v. State of Mysore [1963] 14 S.T.C. 188 that a sale occasions the movement of goods from one State to another within Section 3(a) of the Central Sales Tax Act, 1956, when the movement 'is the result of a covenant or incident of the contract of sale'. In the case before us, the transport of manganese ore from Katangjhiri, that is from the State of Madhya Pradesh, to Gondia and Vishakhapatnam Port, places outside the State, was clearly the result of the contracts of sale entered into between the assessee and the purchasers referred to earlier. The sales were, therefore, clearly inter-State sales and not liable to be taxed under the M. P. General Sales Tax Act, 1958. The Sales Tax Tribunal was thus right in holding that the sales were not liable to be taxed under the local Act, and in remitting the matter to the Sales Tax Officer for assessment under the Central Sales Tax Act, 1956.
5. For these reasons, our answer to the question placed before us is that the turnover of the assessee amounting to Rs. 2,77,976.45 P. was the turnover of inter-State sales of manganese. The assessee shall have costs of this reference. Counsel's fee is fixed at Rs. 200.