R.L. Gulati, J.
1. This is a reference under Section 11(1) of the U.P. Sales Tax Act read with Section 9 of the Central Sales Tax Act.
2. The assessee is a dealer in oil-seeds, foodgrains, etc. For the assessment year 1959-60 he filed quarterly returns showing taxable turnover of various commodities. During the course of assessment the Sales Tax Officer found that the assessee had sold foodgrains worth Rs. 9,916.26 and oil-seeds worth Rs. 12,805.66 in the course of inter-State trade and, as such, he was liable to Central sales tax in respect of those sales. The assessee denied his liability to tax under the Central Sales Tax Act and contended that the sales were intra-State sales. His contention was that sales were made to parties of U.P. and under their instructions the goods were despatched to places outside U.P. This contention of the assessee was not accepted by the Sales Tax Officer and he was assessed to tax under the Central Sales Tax Act. The assessee appealed and the appellate authority set aside the assessment order with a direction to the Sales Tax Officer to afford an opportunity to the assessee to lead evidence to prove his case that the sales were intra-State and not inter-State. The assessee appeared before the Sales Tax Officer in remand proceedings but did not lead any evidence. In fact, he admitted that the sales were inter-State sales. The Sales Tax Officer accordingly made a fresh assessment and imposed tax at the rate of 7 per cent on foodgrains and 3 per cent on oil-seeds. The assessee again appealed and contended that the transactions in dispute were billicut transactions inasmuch as the goods were consigned to self to destinations outside U.P. and the railway receipts were sold to U.P. dealers. The appellate authority dismissed the appeal holding that the transactions amounted to inter-State sales by transfer of documents of title during the course of movement of the goods from this State to other States. The assessee also disputed the rate of tax in respect of foodgrains, but that plea was also rejected and the assessment order was confirmed. Thereafter the assessee applied in revision contending that the sales were intra-State sales and also disputed the rate of tax on foodgrains which according to him was 1 per cent and not 7 per cent. The revising authority has dismissed the revision but at the instance of the assessee has referred the following question for the opinion of this Court:
Whether, under the facts and circumstances of this case, the sales in question of foodgrains for Rs. 9,916.26 and of oil-seeds for Rs. 12,805.66 by the applicant amounted to inter-State sales on which the applicant should pay Central tax If so, what should be the rate of tax payable on these turnovers?
3. Now under Section 3 of the Central Sales Tax Act 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.
4. In the instant case it appears that the assessee entered into contracts of sale with dealers of U.P. but despatched the goods to places outside U.P. The goods were despatched by rail and the railway receipts were made out in the name of the assessee. Thereafter the railway receipts were endorsed in favour of the purchasers. The Judge (Revisions) Sales Tax has found that the despatch of goods to places outside U.P. was an integral part of the contracts of sale. It was a condition of the sale that the assessee should retain the title of the goods with himself till he had delivered them to the railway and to part with that title only by transfer of the railway receipts. On these facts, the Judge (Revisions), Sales Tax, has found that the sales in question were inter-State sales under Clause (b) of Section 3 of the Central Sales Tax Act. We are of the opinion that on the findings recorded by the Judge (Revisions), Sales Tax, the sales in dispute are no doubt inter-State sales but they are covered by Clause (a) and not. Clause (b) of Section 3. Clause (a) applies when a contract of sale occasions the movement of goods from one State to another. The finding that the despatch of goods to places outside U.P. was an integral part of the contract of sale shows that the contract of sale itself occasioned the movement of goods from this State to another State. The fact that the railway receipts were made out in the name of the assessee and were subsequently endorsed in favour of the purchasers also does not change the position. Clause (b) of Section 3 applies only where goods are put in transit without a prior contract of sale and they are sold by transfer of documents while they are still in transit. This is not the case here. The goods had moved under a contract of sale and the integral part thereof was to despatch them to stations outside U.P. The fact that the buyers and purchasers both belong to U.P. is also of no consequence. There can be an inter-State sale between two persons belonging to the same State if the goods move from one State to another as a result of a contract of sale or the goods are sold while they are in transit by transfer of documents. It is also immaterial as to where the property in goods passes from the seller to the purchaser.
5. The question referred to us also relates to the rate of tax but the earned counsel for the assessee has stated that he does not dispute the rate of tax.
6. We accordingly answer the question by saying that the sales in question were inter-State sales and were liable to tax under the Central Sales Tax Act. The Commissioner of Sales Tax is entitled to the costs which we assess at Rs. 100.