G.P. Singh, C.J.
1. This is a reference made by the Sales Tax Appellate Tribunal referring for our answer the following questions of law :
(1) Whether, under the facts and circumstances of the case, it has been correctly laid down by this Tribunal that in case the place of manufacture of ferro-manganese was outside this State, the disputed transactions are to be treated as inter-State sales ?
(2) Whether, in the absence of any entry regarding location of the factory for manufacture of ferro-manganese in the contracts, the Tribunal was justified in ordering that the location of these factories should be determined in order to decide whether the sales involved under these agreements were inter-State Sales ?
2. The assessment years covered by the reference are 1961, 1962 and 1963. The dealer sold manganese ore to different parties under separate contracts. In all there were sixteen contracts. In the seven contracts there was express provision of movement of goods to places outside the State and the sales under these contracts were held to be inter-State sales by the Deputy Commissioner of Sales Tax. In respect of the remaining nine contracts, the Deputy Commissioner held that they were intra-State sales. In the appeal filed by the dealer before the Tribunal, it was held that if the buyers had their factories for manufacture of ferro-manganese outside the State of Madhya Pradesh and if the goods were actually sent to those places, the sales were inter-State sales. The case was remanded by the Tribunal on this finding to ascertain whether the goods under these nine contracts were sent outside the State. It is in respect of these contracts that the aforesaid questions of law have been referred at the instance of the department.
3. All the nine contracts are alike. The following term in the contracts is important for the decision of the questions referred :
The sellers undertake to sell and the buyers undertake to buy aforementioned longations of manganese ore for the sole purpose of consumption in India, for the manufacture of ferro-manganese by the buyers and on the express understanding by the buyers that there shall be no resale of any of the ore either internally in India or for export.
4. It is not in dispute and it is also clear that the purchases were made by the buyers under these nine contracts for the manufacture of ferro-manganese. The buyers could not resell the manganese ore purchased by them either internally in India or export it outside India. The contention of the dealer is that the buyers had their factories outside the State of Madhya Pradesh and the goods were sent to the places where the factories are located. It is this fact which has yet to be enquired into after remand made by the Tribunal. The Tribunal has decided the question as to the character of the sales after assuming that the factories are located outside the State and the goods were really sent to those places. We have also to decide that question on the same assumption. As it was specifically provided in the contracts that the buyers were to use the manganese ore for the manufacture of ferro-manganese and as they were not entitled to resell the manganese ore purchased by them, the movement of goods from the State of Madhya Pradesh to the places outside the State where the buyers' factories were located was clearly occasioned by the sales. The sales were, therefore, inter-State sales. It is true that the delivery was taken by the buyers at the railway siding of the dealer within Madhya Pradesh and the property in the goods also passed within the State; but passing of the property is not the test for deciding whether a sale is an inter-State sale under Section 3(a) of the Central Sales Tax Act. The facts of the instant case are similar to the facts of the case in State of M.P. v. Bengal Paper Mills 1979 MPLJ 478. In that case, bamboos were purchased by the buyer for use in its paper mills in West Bengal. Although the property in the goods passed within the State it was held that as the buyer could not use the goods except for manufacture in its paper mills in West Bengal, the sale occasioned the movement of goods from Madhya Pradesh to West Bengal and was an inter- State sale. The same principle applies in the instant case also.
5. For the reasons given above, we answer the questions referred in the affirmative in favour of the dealer and against the department. There will be no order as to costs of this reference.