1. Under Section 8 of the Central Sales Tax Act, a seller, who effects a sale of goods constituting an inter-State sale, is permitted to pay sales tax at the favourable rate of one per cent., if the sale is effected to a registered dealer and subject also to the condition stated in Section 8(4) of the Act that the seller shall furnish a declaration in the form prescribed as Form 'C '. The Madras State Government under its rule-making powers, framed Rule 10(1), the proviso of which at the period of the present sale, read :
Provided that no single declaration shall cover more than one transaction of sale, except in cases where the total amount covered by one declaration is equal to or less than Rs. 5,000 or such other amount as the State Government may, by a general order, notify in the Fort St. George Gazette.
2. This proviso was subsequently modified thus :
Provided that when goods are delivered in instalments within the same financial year against one purchase order, and a declaration in Form ' C' covering the entire order is furnished along with the return for the period relating to the first instalment, separate declarations need not be furnished along with the returns for the period relating to the subsequent instalments delivered within the same financial year if reference to the previous returns and declaration is given in the statement furnished with the subsequent returns.
3. But this amendment of the proviso to the rule came into force after the transactions now in dispute. Only the proviso as extracted earlier was applicable at the period in question.
4. In the present case, a dealer in Calcutta placed bulk orders with the assessees who are Messrs Needle Industries (India) Private Limited, Ootacamund, for the purchase of considerable quantities of gramophone needles. Each purchase order was carried out by delivery of the ordered quantity in certain instalments for which separate invoices were issued. Prices were also paid in instalments according to the separate invoices. The contract however did not specifically provide for delivery of goods in instalments or payment of the price in instalments. For the sake of convenience between the parties, this arrangement of delivery of goods in instalments and payment of price in instalments seems to have been entered into. Only one declaration in Form 'C was given in support of each purchase order. Since the value of the goods covered by several purchase orders for each of which there was a single Form ' C ' exceeded Rs. 5,000, the department took the view that proviso to Rule 10(1) should be applied so as to require separate 'C Form for each instalment and since there were no such separate 'C Forms, the assessees were bound to pay tax at the higher rate of seven per cent, and would not be entitled to the benefit of the lower rate of one per cent. However, the Sales Tax Appellate Tribunal was of the view that since the invoices were all raised against a single purchase order, each of the invoices could not be treated as a separate transaction of sale requiring a separate 'C Form, and thereafter gave the assessee the benefit of the lower rate assessment.
5. It is against this decision of the Tribunal, that the present revision has been filed in this Court by the State of Madras. We heard the arguments of learned counsel for the petitioner and learned counsel for the respondent. The two provisos to Rule 10(1), the one as it stood originally, and the other as it was amended subsequently, clearly reveal that the earlier proviso was vague in its terms and required clarification. Support is lent to this reasoning, because the 'C Form issued by the authorities even under the old proviso, and which has been shown to us, mentioned the words 'purchase order'. Bills drawn against the purchase order have to be shown in the 'C Form. Thus it may be reasonably held that, even in the proviso as it stood before its amendment, the term transaction of sale was equated to the fulfilment of a given purchase order, even though it might have led the parties to the contract to arrange for the delivery of the goods and the payment of price in instalments. No doubt there might be cases where the parties to a contract of sale might precisely stipulate by agreement for the delivery of goods in instalments and also the payment of the price in instalments. In such cases, in the case of non-fulfilment of the contract, intricate questions might arise as to whether the contract was one, or was severable according to the number of instalments provided for. But in the present case, no such difficulty arises. The contract is silent about the instalments. As we have already indicated, the delivery of the goods in instalments and the payment of price in instalments against separate invoices, were only resorted to by the parties for their own convenience and by mutual agreement, during the course of the fulfilment of the contract. It cannot therefore be held to follow automatically, that the contract gave rise to as many distinct sale transactions as there were deliveries by instalments followed by corresponding invoices. In this connection, we also refer to the remarks of Benjamin on 'Sale' at page 734 (eighth edition):
1. Every contract for a quantity of goods is an entire contract for that quantity, though the goods may be deliverable by instalments in the sense that full delivery is firitna facie a condition precedent to the liability of the buyer to pay any part of the price.
2. An instalment contract may be implied from the terms of the contract, or may be inferred from the circumstances. Thus, for example, it is implied when the goods are deliverable 'as required' or on similar terms.
6. As already observed, the contract in this case appears to have been one and entire, and the delivery of goods by instalments was effected only to suit the convenience of the parties and does not lead to the inference of a severable contract involving more than one sale transaction. We uphold the view of the Tribunal and dismiss the revision case. There will be no order as to costs.