1. This judgment will dispose of Civil Writ Petitions Nos. 220-D of 1962 and 221-D of 1962. I am confining myself to the facts of Civil Writ No. 220-D of 1962 as the learned counsel agree that the decision in this case will govern the toher matter. The petitioner-company alleges in the petition that it manufactures 'Katha', 'Cutch', etc., in its factory at Izatnagar within the State of Uttar Pradesh; that under the contracts made with parties in Calcutta, Bombay, Madras and Delhi, for sale the goods are delivered f.o.r. Izatnagar and are dispatched from Izatnagar to customer's place of business; that instructions are sent by the petitioner's head office in Calcutta to its factory at Izatnagar to dispatch the goods in terms of the agreements for sale. When the goods are ready, they are 'Unconditionally appropriated' by the petitioner's factory to the respective contracts and are thereafter dispatched by rail direct to the customer's place of business; that the relative Railway Receipts are taken in the name of the petitioner as Consignor and 'self' as consignee. The railways receipts are sent to the respective offices of the petitioner in the territories from where the order emanate. Such offices of the petitioner prepare bills, collect payments and endorse the railway receipts and deliver them to the customers when the goods are in the course of movement; that during the assessment period 1957-58 (i.e 1-7-1957 to 31-3-1958) the petitioner through its Delhi office entered into agreements with customers for sale to them of its products manufactured at its factory at Izatnagar in the State of Uttar Pradesh; that the agreements in all those case provided for delivery f.o.r. Izatnagar and also contained instructions for dispatch of the goods to customer's place of business at Delhi; that when the goods were made ready, the factory at Izatnagar 'unconditionally appropriated' the same to the contracts and dispatched them by rail to Delhi; that the goods were booked in the name of the petitioner as the consignor and 'self' as consignee, and that the railway receipts were then sent to the petitioner's Delhi office which prepared bills, collected payments and endorsed the railway receipts in favor of the purchasers and delivered the receipts to them, while the goods were in the course of the movement.
It is nto in dispute that the sales in question to various parties in Delhi were sales in the course of inter-State trade and commerce within Section 3 of the Central Sales Tax Act. In the counter affidavit the respondents admit that the relevant sale agreements were entered into by the petitioner at Delhi through its Delhi office for supply of goods manufactured at Petitioner's factory at Izatnagar. The respondents, however, maintain that delivery f.o.r. Izatnagar simply meant that freight from Izatnagar to Delhi was to be borne by the purchasers. The respondents deny that there was any 'Unconditional appropriation' of goods to the contract in Uttar Pradesh and say that 'they were appropriated to contracts only when railway receipts representing title to them were endorsed by the petitioner's office at Delhi in favor of the purchases against payments made by the latter at Delhi to the petitioner. The bills for the goods were also prepared at Delhi.' The petitioner submitted returns to the Sales Tax Officer, Bareilly in the States of Uttar Pradesh under the Central Sales Tax Act for all its sales throughout India including Delhi Sales and the said Sales Tax Officer Bareilly assessed the petitioner to tax also with respect to transactions of sale made to parties in Delhi and the petitioner paid the entire tax demand for the said period to the Sales Tax Authorities in Uttar Pradesh.
It is admitted by the respondents in their counter-affidavit that the petitioner has paid the entire tax due on the transactions in question in Uttar Pradesh but the respondents claim that the appropriate State entitled to levy and collect tax being Delhi, the State of Uttar Pradesh could nto collect tax on the transactions in question. In paragraph 8 of the petition it is stated, inter alia, that the goods were 'appropriated to the contracts' for sale in Uttar Pradesh. The respondents in their counter-affidavit assert that the goods were, in fact 'appropriated' to the contracts in Delhi. Although the petitioners have paid the entire Sales Tax demand with respect to the transaction in question in Uttar Pradesh, still order dated 28th March 1962, the Sales Tax Officer, New Delhi assessed the petitioner to sales tax under the Central Sales Tax Act with respect to the same transactions and raised a demand for Rupees 14,870-08 P.
(2) Before the Sales Tax Officer, New Delhi, the petitioners raised the same very contentions as have been raised in this petition, and mentioned hereinbefore. One of the contentions raised by the petitioner may be reproduced from the order of the Sales Tax officer. That was-
'The assesseds have contended that the Central Sales Tax is to be deposited in the State where the sales took place and Section 4 of the Central Sales Tax Act determines the place of sale; that according to the aforesaid Section their sales should be deemed to have taken place inside U. P. And outside toher States because the goods were within U. P. At the time effected with their purchasers who give their assent to their appropriation by virtue of their accepting the goods; that Section 3(b) contemplates cases of sale after first sale while Section 4(2)(b) takes into account those sales where the goods were appropriated to a contract; that their sales were governed by Section 3(a) and the tax was payable in U. P. '
It is apparent, thereforee, that one of the contentions raised before the Sales Tax Authority Delhi was that the goods had been 'appropriated' to contract in Uttar Pradesh. The Sales Tax Officer held:-
'I have carefully considered the assesseds. The Supreme Court in the above cited case held that a transaction of sales is subject to tax under the Central sales tax Act, 1956 on the completion of the sale is and the mere contract of sale is nto a sale within the definition under Section 2(g). In the judgment the Court had given directions that the Officer had to ascertain before he could order payment of tax under the Act that on the materials he was satisfied and (a) that the goods at the time of transfer of documents of title were in movement from the State of U. P. To the State of West Bengal and (b) that the place where the sale was effected was under Section 4(2) within the State of West Bengal. It has been admitted that the goods at the time of transfer of documents to the title were in movement from the State of U. P. To the Union territory of Delhi. Further from the course of transactions viz., entering into agreements with the customers at Delhi, forwarding the agreements to the Head Office at Calcutta for execution, sending the goods consigned to self and effecting transfer of documents against payments at Delhi, it is quite manifest that the place of sale was Delhi.
In view of the above, I hold that the transactions were in the nature of inter-State sales contemplated by Clause (b) of Section 3 as being effected by transfer of documents of title to the goods during their movements from one State to antoher at Delhi and are accordingly assessable to Delhi Central Sales Tax.'
(3) From the above, it clearly appears that the Sales Tax Officer, New Delhi, took the view that the transactions were in the nature of inter-State sales as contemplated by Clause (b) of Section 3, having been effected when the goods were in movement from Uttar Pradesh to Delhi. He, however, gave no clear finding as to whether the goods were or were nto 'appropriated' to the contract in Uttar Pradesh. Aggrieved by the order of the Sales Tax Officer, New Delhi, the petitioner failed the present writ petition, praying for the quashing of the same without taking recourse to the alternative remedy by way of appeal etc., provided in the Act and one of the objections taken on behalf of the respondents is that failure to take recourse to such remedies is fatal to the petition. It is necessary to read the relevant provisions of the Act then in force:-
'Section 2. In this Act unless the context toherwise requires-
(a) 'appropriate State' means-
(I) in relation to a dealer who has one or more places of business situate in different States, every such State with respect to the place or places of business situate within its territory;
Explanationn- 'Place of business' means:
(I) in the case of a sale of goods in the course of inter-State trade or commerce falling within Clause (a) of Section 3, the place from which the goods have been moved by reason of such sale;
(ii) in the case of such sale falling within Clause (b) of Section 3, the place where the sale is effected.'
'Section 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 antoher; or
(b) is effected by a transfer of documents of title to the goods during their movements from one state to antoher.
Explanationn 1. Where the goods are delivered to a carrier or toher bailee for transmission, the movement of the goods shall, for the purposes of Clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee.
Explanationn 2. Where the movement of goods commences and terminates in the same State it shall nto be deemed to be a movement of goods from one State to antoher by reason merely of the fact that in the course of such movement the goods pass through the territory of any toher State.'
'Section 4(1) Subject to the provisions contained in Section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all toher States.
(2) A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State-
(a) in the case of specific or ascertained goods, at the time of the contract of sale is made; and
(b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the toher party is prior or subsequent to such appropriation.
'Section 9. (1) The tax payable by any dealer under this Act shall be levied and collected in the appropriate State by the Government of India, in the manner provided in sub-section (2)
(2) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid or collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, review, revisions, references, penalties, and compounding of offences, shall apply accordingly.
(3) The proceeds (reduced by the cost of collection) in any financial year of any tax levied and collected under this act in any State on behalf of the Government Of India, shall, except insofar as those proceeds represent proceeds attributable to Union territories, be assigned to that State and shall be retained by it; and the proceeds attributable to Union territories shall from part of the Consolidated Fund of India.'
(4) Mr. Ashok Sen, the learned counsel for the petitioner contended that under Section 9, the tax was payable only once, though it had to be collected by the Government of India, 'in the appropriate State' and having paid the tax in Uttar Pradesh, Delhi could nto, on proper interpretation of the Act, levy and/or collect it over again. These very provisions came up for consideration before their Lordships of the Supreme Court in Tata Iron and Steel Co.,Ltd., Bombay v. S. R. Sarkar, (1960) 11 Stc 655, Majority of their Lordships said-
'Sale is defined in Section 2(g) as meaning any transfer of property in goods by one person to antoher for cash or for deferred payment or for any toher valuable consideration and includes a transfer of goods on the hire-purchase or toher system of payment by Installments, but does nto include a mortgage or hyptohecation of or a charge or pledge on goods. By Section 3 a sale or purchase of goods is demand to take place in the course of inter-State trader or commerce if the sale or purchase (a) occasions the movement of goods from one State to antoher, or (b) is effected by transfer of documents of title to the goods during their movement from one State to antoher. A transaction of sale is subject to tax under the Central Sales Tax act on the completion of the sale, and a mere contract of sale is nto a sale within the definition of sale in Section 2(g). A sale being by the definition, transfer of property, becomes taxable under Section 3(a) if the movement of goods from one State to antoher is under a covenant or incident of the contract of sale, and the property in the goods passes to the purchaser toherwise than by transfer of documents of title when the goods are in movement from one State to antoher. In respect of an inter-State sale, the tax is livable only once and that indicates that the two clauses of Section 3 are mutually exclusive. A sale taxable as falling within Clause (a) of Section 3, will be excluded from the purview of Clause (b) of Section 3; toherwise certain sales may be liable to tax under btoh the clauses and two State may in respect of a single sale, claim to levy the tax contrary to the plain intendment of Section 6 and 9 of the Act.
The sale is contemplated by Clauses (b) is one which is effected by transfer of documents of title to the goods during their movement from one State to antoher. Where the property in the goods has passed before the movement has commence, the sale will evidently nto fall within clause (b); nor will the sale in which the property in the goods passes after the movement from one State to antoher has ceased to be covered by the clause. Accordingly a sale effected by transfer of documents of title after the commencement of movement and before its conclusion as defined by the two termini set out in Explanationn (I) and no toher sale will be regarded as an inter-State sale under Section 3(b).
The view of the Supreme Court, thereforee, was that within Clause (b) of Section 3 are included sales in which the property in goods passes during the movement of goods from one State to antoher by transfer of documents of title thereto. It was further held that-
'We are unable to hold that any weight can be attached to the argument that if it was the object of the Legislature by enacting sub-section (2) of Section 4 to explain the expression, 'where the sale is effected' as used in Clause (ii) of the Explanationn of Section 2(a), the Legislature would have expressly stated so. Nor are we able to agree with the contention that Section 4 only seeks to define outside sales and is nto intended to locate the place where a sale is effected. The argument that by the application of Section 4, sub-section (2), in cases where the goods sold are unascertained or future goods, there will be difficulty in ascertaining the place where the sale is effected has also no force'.
(5) For the purpose of this decision I will assume that the finding of the Sales Tax Officer, New Delhi, 'that the transactions were inter-State as contemplated by Clause (b) of Section 3' is correct. If that be so, the appropriate State would be the State in which the sale is effected. That is the effect of Explanationn 2 to Section 2(a). There was no controversy at the bar that the goods in question were unascertained and consequently, the place where 'sale is effected' will have to be determined under Section 4(2)(b) . Under the said Section 4(2)(b) the place of sale depends upon the location of the goods at the time of their appropriation to the contract of sale It may be pointed out that Section 4(2)(b) does nto require an unconditional appropriation as required by Section 23 of the Sale of Goods Act. The question, thereforee, arises whether under Section 4(20)(b) the location of sale depends on mere appropriation of goods to the contract or unconditional appropriation thereof. The term 'appropriation' maybe used in the sense that the goods are identified by the agreement of the parties as the goods about which they are contracting, so; that the contract can never apply to any toher goods. In toher words, the goods are so far appropriated that the seller would, by delivering any toher goods, break the contract through the goods still remain the seller's property. The term 'appropriation' has nto been defined and in the primary sense ' to appropriate' is to set apart thing with common consent as the property of a buyer and where a person is entitled to goods which form part of a larger quantity and are nto earmarked, and afterwards, the rest and set apart for hi, they are said to be appropriated. In the toher sense, it may mean a final appropriation of the goods to the contract so as to pass the property therein to the buyer. Consequently, when goods are selected with the common consent of the parties there may be appropriation of the goods to the contract even though the property has nto passed. The scheme of the Sales Tax Act goes to show that the Parliament left out of account the element of passing of property as of any relevance in determining the situs of sale and the question of appropriation of goods has to be decided, irrespective of the passing of property
In toher words, the appropriation referred to in Section 4(2)(b) conntoes the setting apart of goods as specific goods to be delivered under the contract of sale and nto an appropriation linked with passing of property. The term 'unconditional appropriation' existed in the Sale of Goods Act, years before the enactment of the Central Sales Tax Act, and if the Parliament intended to convey the same idea, the Parliament would nto have omitted the word 'unconditionally' in Section 4(2)(b)
In the petition as well as in the counter-affidavit emphasis has been mainly laid on 'unconditional appropriation' of the goods to the contract in Uttar Pradesh, but from the contentions of the assessed raised before the Sales Tax Officer, New Delhi. Which have been qutoed above, it does appear that the petitioner had argued that the goods were appropriated to the contract in Uttar Pradesh. The findings given by the Sales Tax Officer, New Delhi, are quite consistent with 'appropriation of goods' in Uttar Pradesh. He has given no clear finding that the goods were appropriated to the contract as distinguished from 'unconditionally appropriated' in Delhi. Without that finding the Sales Tax Officer could nto assume jurisdiction of levy or collect the sales tax. Mr. Kirpal, the learned counsel for the respondents, a contended that these intricate questions of fact should nto be determined in the exercise of writ jurisdiction and the petition should be dismissed on the short ground for the petitioner's failure to avail themselves of the alternate remedies. I am nto going into or interfering with any finding of fact as my decision is based on the failure of the Sales Tax Officer to give a finding about the place of appropriation of goods. So far as the alternate remedy is concerned, it does nto affect the jurisdiction of this Court, though normally, the courts would be relucant to interfere in the writ jurisdiction when alternate remedies are available.
(6) Having regard, however, to the circumstances of this case, namely,
(a) the petitioner has already paid the tax due on these transactions in Uttar Pradesh and without a firm finding, it would be unjust to burden the petitioner with the levy a second time; and
(b) the Sales Tax Officer had no jurisdiction to assess the petitioner to tax without giving a finding as to the place where sale was effected, on proper application of law,
I am nto inclined to dismiss this petition on the ground of the existence of alternate remedy.
(7) In these circumstances, these petitions are allowed and the orders of the Sales Tax Officer, New Delhi, quashed, leaving the parties to bear their own costs. It will, however, to open to the Sales Tax Officer, New Delhi, to make fresh order if that course be permissible in law.