1. The petitioner purchased the goods concerned in the local market. It is common ground that those purchases will attract the tax under the General Sales Tax Act, 1125, if they were not in the course of inter-State trade or in the course of export from this State. According to the petitioner some of those purchases were in the course of inter-State trade, the others in the course of export from this State, and all of them as a result are exempt from taxation under the Act.
2. Under Section 3 of the Central Sales Tax Act, 1956, a sale or purchase of goods should be deemed to take place in the course of inter-State trade or commerce if the sale or purchase occasions the movement of goods from one State to another; and under Section 5 of the said enactment a sale or purchase of goods should be deemed to take place in the course of the export of the goods out of the territory of India if the sale or purchase occasions such export. It is agreed that we may proceed on the assumption that all the purchases made by the petitioner in the local market were after the receipt of orders for such goods from buyers in other States or outside this country. According to the petitioner the fact that the purchases were after the receipt of the orders is significant and should induce the conclusion that the orders from the outside buyers, the purchases by the petitioner in the local market and the ultimate movement of the goods from here to destinations outside the State constitute an integrated commercial adventure; in other words the purchases should be deemed to have taken place in the course of inter-State trade or in the course of export from this country and thus exempt from taxation.
3. The sole question for determination is whether the movement of the goods from this State was occasioned by the local purchases made by the petitioner. In Tata Iron and Steel Co., Ltd., Bombay v. S. S. Sarkar, AIR 1961 SC 65 the Supreme Court referred to its earlier decisions under Article 286 of the Constitution and said:
'In those cases, the meaning of the expressions, 'in the course of import and export' and 'in the course of inter-State trade or commerce' used in Article 286 fell to be determined. The Constitution does not define these expressions. The Parliament has in the Central Sales Tax Act, 1956 sought to define by Section 3 when a sale or purchase of goods is said to take place in the course of inter-State trade or commerce and by Section 4(1) to define when a sale or purchase of goods is said to take place outside a State and by Section 5, when a sale or purchase is said to take place in the course of import or export. In interpreting these definition clauses, it would be inappropriate to requisition in aid the observations made in ascertaining the true nature and incidents without the assistance of any definition clause of 'sales outside the State' and 'sales, in the course of import or export' and 'sales in the course of inter-State trade or commerce' used in Article 286'.
In view of this observation we propose to mention only one of the earlier cases, State of Madras v. Gurviah Naidu and Co. Ltd., (S) AIR 1956 SC 158.
4. In that case as in the case before us, orders for the goods preceded the local purchase's by the assessee. The Supreme Court said :
'The evidence on record amounts only to this, namely, that after securing orders for supply of skins to the London buyers the respondents used to go about purchasing the requisite kind and quantity of skins to implement such orders. Such purchases were, it is true, for the purpose of export, but such purchases did not themselves occasion the export and consequently did not fall within the exemption of Article 286(1)(b) of the Constitution'.
5. It is impossible to say that the petitioner's purchases occasioned the movement of the goods from this State. In common usage the words 'cause' and 'occasion' are synonymous. 'Such in fact', says Ballentine, 'is their ordinary use' (Law Dictionary, Second Edition, Page 898).
6. The fact that the purchases were after securing the orders and before the despatch of the goods are not by themselves sufficient to forge the causal connection between the purchases and the movement which is essential for earning the exemption provided. The petitioner was not bound to utilise the goods purchased to fulfil the orders he had received. He could have, without breaking any contract, utilised them in any manner he liked.
7. A sequence of events -- which is all that we have--does not necessarily spell a causal connection between the events concerned. The petitioner's claim for exemption under Sections 3 and 5 of the Central Sales Tax Act, 1956, fails and is hereby rejected.
8. There is another matter which does not arise in the other cases heard along with this petition. That is the contention of the petitioner that a turnover of Rs. 16,699/12 relating to green ginger is not liable to taxation in view of the Full Bench decision in Krishna Iyer v. State of Kerala, O. P. No. 767 of 1959 (FB). The Advocate-General concedes that the contention is correct and it is hereby sustained.
9. The petition is allowed to the extent indicated above and rejected in all other respects.No costs.