1. This order will dispose of Sales Tax Reference Nos. 4 of 1965 and 4-A of 1965. One common question of law has been referred by the Financial Commissioner in pursuance of the orders of this Court dated the 13th February, 1964, passed in General Sales Tax case No. 9 of 1962 and General Sales Tax Case No. 10 of 1962.
2. It may be pointed out that while refering the question of law, the learned Financial Commissioner has not stated the case as required by Section 22(3) of the Punjab General Sales Tax Act, 1948. In order to enable us to answer a question of law effectively, it is the duty of the Financial Commissioner to state the case properly. However, we have not thought it fit to send the cases back to the Financial Commissioner to enable him to restate them properly because the question that has been referred to us is a pure question of law and does not depend, for the its determination, on the facts of both the cases.
3. The question of law, that has been referred to us, is as follows:
'Whether, on the facts and circumstances, of this case, the goods sent from Punjab to Uttar Pradesh by V. P. P. and thus sold are not liable to tax under the Central Sales Tax Act. 1956, and such tax is not leviable by the Punjab authorities?'
4. The contention of the learned counsel for the assessee is that the sale by V. P. P. is not an inter-State sale and thus not taxable under the Central Sales Tax Act, 1956. Inter-State Sales Tax is to be levied from the seller as would be apparent from Section 6 of the Central Sales Tax Act and if we come to the conclusion that the present sale is an inter-State sale, it is not disputed and indeed it could not be that the Punjab authorities could levy the sales tax in conformity with the Central Sales Tax Act. Thus, the only question that requires determination is--whether the sale by V. P. P. in the present cases is an inter-State sale? In a sale by V. P. P., there is an order placed by the buyer on the seller. The seller despatches the goods by postal parcel and the goods are to be delivered by the postal authorities to the buyer on payment of their price. In some cases goods may even be sent by V. P. P. without an order. It is common ground before us that the property in the goods would pass and the sale would be complete on the buyer paying the price of the goods and not before that. Therefore where the buyer does not accept the goods and returns them, there is no sale and the question of levying any sales-tax thereon does not arise. The question of levy of sales-tax only arises in those cases where the goods have been accepted by the buyer and the postal parcel has been paid for.
Section 3 of the Central Sales Tax Act defines 'inter-State sale' as follows:
'A sale of goods shall be deemed to take place in the course of inter-Stale trade or commerce if the sale--
(a) occasions the movement of goods from one State to another.
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' We are not concerned with the remaining part of this provision for our purposes. The sale by V. P. P. would surely be covered by Section 3. The expression 'occasions the movement of goods' has been considered by their Lordships of the Supreme Court in Tata Iron and Steel Co. Ltd. v. S. R. Sarkar, AIR 1961 SC 65, to mean 'in which the movement of goods from one State to another is the result of a covenant or incident of the contract of sale, and the property in the goods passes in either State'. This view was again reiterated in State Trading Corporation of India Ltd. v. State of Mysore, AIR 1963 SC 548.
In the present case, actual sale in terms of the definition of 'sale' in Section 3(g) of the Central Sales Tax Act took place in the State of Uttar Pradesh where the parcel was received and its value paid to the post office. See in this connection the decision of the Supreme Court in Commr. of Income-tax, Delhi v. P. M. Rathod and Co., (1959) 10 STC 493: (AIR 1959 SC 1394), wherein it was observed by their Lordships as follows:
'In the case of delivery of goods by V. P. P. it is immaterial whether the buyer directs the goods to be sent by V. P. P. or the seller does so on his own accord, because the goods handed over to the post office by the seller can only be delivered to the buyer against payment and this payment is received for and on behalf of the seller. The buyer does not pay till the goods are received by him and once he has paid the price, it is the post office that is responsible for payment of the money received by it to the seller. The principle governing a despatch of articles by V. P. P. is that the appropriation is conditional and goods only pass when the condition is fulfilled, that is, the price is paid against delivery. The post office is an agent for the seller and receives the price from the buyer at the place of delivery for transmission to the seller.'
The goods, that were sold, had to move from Punjab to Uttar Pradesh in order to complete that sale. The movement of goods is a direct result of the sale. For the purposes of law, it hardly matters whether the goods move before the sale is completed or after the sale is completed. In order to be an inter-State sale, the sale must answer the definition of the same in section 3 of the Central Sales Tax Act, that is, there must be movement of goods in connection with the sale. Two things must co-exist--a sale of goods and the movement of goods, from one State to another. In the present case, both the requirements of section 3 are satisfied. We are, therefore, clearly of the view that the sale in the present case is an inter-State sale.
The contention of the learned counsel for the assessee, that the movement of the goods must precede the sale before it can be an inter-State sale, is wholly untenable.
5. Mr. Sarin, learned counsel for the assessee, relied upon the decision of the Supreme Court in (1959) 10 S. T. C. 493: (AIR 1959 S C 1394) for his contention that the sales in the present cases are not inter-State sales. This decision does not help the contention of the learned counsel. Their Lordships of the Supreme Court were not considering the provisions of the Sales Tax Act, with which we are concerned in the present cases.
6. For the reasons given above, we answer the question referred to us in the negative, that is. the goods sent by V. P. P. from Punjab to Uttar Pradesh are liable to Central Sales-tax and such tax is leviable by the Punjab authorities. We further direct that the assessee will pay the costs of these references to the department. The costs are assessed at Rs. 100/- in each case.
D. Falshaw, C. J.