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"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 another; or (b)is effected by a transfer of documents of title to the goods during their movement from one state to another.

Explanation 1:- Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purpose of clause (b) be deemed to commence at the time of such dellivery and terminate at the time when delivery is taken from such carrier or bailee.

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"The Supreme Court further observed that the sale contemplated by clause (b) is one which is effected by transfer of documents of title to the goods during their movement from one State to another. Where the property in the goods has passed before the movement has commenced, the sale will evidently not fall within clause(b) nor will the sale in which the prrperty in the goods passes after movement from on State to another has ceased, be covered by the clause.

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l."document of title to goods":- include a bill of lading, dock-warrant, warehouse-keeper's certificate, wharfi ngers, railwl ay receipt, multidodal transport document, warrant or order for the delivery of goods and any other dcument used in the ordinary

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course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorssement or by deliviery, the possessor of the document to transfer or receive goods therby represented; 2- Section 51 duration of transit goods are deemed to be in course of transit from the time when they are delivered to a carrier or other bailee for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from such carrier or other bailee. 3- Section 33 Deliverry Delivery of goods may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorized to hold them on his behalf.

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Explanation * :— Where goods are delivered to a carrier or other

bailee for tranasmission the movement of the goods shall, for the purpose 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.

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This court is of the opinion that the concept of constructive delivery is not at all relevant for the purpose of giving exemption from tax under Section 6(2) of the CST Act. The condition stipulated for giving such exemption from CST are contained in section 6(2) of the Act itself, namely furnishing of declaration prescribed under Section 8(4) of the CST Act and certificate under Rule 12 it Form E-1 and E-2 prescribed under the CST (Registration and Turnover) - Rules, 1956. There is no place of any intendment in taxing statutes; therefore, concept of constructive delivery could not be imputed into the realm of conditions for grant of exemption under Section 6(2) of the CST Act. Explanation 1 to section 3(b) of the CST Act also clearly stipulates that the movement of the goods for the purpose of clause (b) shall be deemed to commence at the time of such delivery of goods to the carrier or the baliee for transmission and terminate at the time when delivery is taken from the carrier or baliee.

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1 II* 1iu1i * iii

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"Dealing with section 3(b) read with Explanation 1, the court held that a sale or purchase of goods takes place in the course of interstate trade or commece, if effected by the transfer of documents of title to the goods during their movement from one state to the other shall be deemed to be an inter state sale. The court found that the starting point of the movement is delivery of the goods to the carrier or bailee for transmission and the point of termination is when the goods taken delivery of from the carrier of such bailee. The division bench held that the Explanation contains a deeming clause and the fiction so created is to be taken to its logical conclusion. The court further held that if sale or purchase is effected by transfer of documents of title to the goods during such movement of the goods during such movement of the goods it shall be treated as an inter-state sale".

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(1 996) 20 3ITLR 311

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"6(2) Notwithsatnding anything contained in subsection (1) or sucb section (IA) where a sale of any goods in the course of inter state trade or commece has either occasioned the movement of such goods from one stae to another or has benn effected by a transffer of documents of title to such goods during their movement from one state to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods:-

(A) to the government >> ,

-7---3Jt1tf *14[-1650/2012 /lTft4t

(B) To a registered delaer other than the government if the goods are of the description referred to in sub section (3) of section 8, Shall be exempt from tax under this Act:"

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(i) State of West bengal and othres Vs. Joshi Jute corporaion and another (1996) 100 STC 17 (Cal-2judges)

Inter State sale second or subsequent inter state sale - examption Order placed

with jute mill in calcutta by jute dealer in calcutta - On instruction by dealer

goods sent by mill directly to party in Kerela - Sale by mill dealer inter state sale

- Sale by dealer to kerela party by endrosement of consignment note- Subsequent sale - Exempt Central Sales Tax Ac (74 of 1956) 3(b) 6(2)

The Respondent a dealer in jute goods in calcutta placed an order upon a

jute mill in calcutta for certain jute goods. under instruction from the respondent

dealer the goods were

delivered directly to a party in kerela. The respondent delaer's claim that it sales

to the kerela party were subsequent sales within the meaning of section(2) of the

Central Sales Tax Act 1956 and exempt was rejected by the commercial tax

Officer. A single judge of the High court on a writ petition held that the sales in

question were subsequesnt sales and exempt. On appeal by the department.

Held dismissing the appeal that form the documents placed on record by

the respondent before the CTO, such as contracts, shipping instruction, invoices

and bills prepared by the mills as welli as by the respondent, it was clear that

transaction, in question were subsequent sales. The respondent had paid sales tax

at the rate of 4 per cent on its purchase from the mill, and had not charged teh

kerela party any. The commercial tax officer ought to have been satisfied with

-8-314t1 (1s4I-1650/2012/L(Jef1

the documents and statements filed, which unequivocally proved that the first

sale by the mill to the respondent and statements filed, which unequivocally

proved that the first sale by the mill to the respondnet was an inter-state sale by

transfer of documents of title (consignment notes) and the second transfer by the

respondent to the kerela party endrosment of the consignment note was a

subsequent sale which did not attract tax over again.

(ii)A & G Projects And Technologies Ltd. Vs. State of Karnataka (2009) 19 VST 239 (SC- 2 Judges):

Inter-State sale—Inter-State sale or intra-State sale—Two tests applied—Sale

occasioning movement of goods or sale by transfer of documents of title to

goods while goods are in transit—Dividing line—Second or subsequent inter-

State sale not exempt under section 6(2)—Appropriate State entitled to levy

tax—Provision not applicable to "subsequent sale" covered by section 3(a)-- Karnataka Sales Tax Act (25 of 1957), s. 12B(4)—Central Sales Tax Act (74 of 1956), ss. 3(a), (b), 6(2), 9(1), proviso—Sale of Goods Act (3 of 1930), ss. 2(4), 23.

Inter-State sale or local sale—Though essentially question of fact—Yet is a

mixed question of law—Central Sales Tax Act (74 of 1956), s. 3.

To ascertain whether a sale is an inter-State sale or not, two tests are applied,

one of which is that a sale or purchase takes place in the course of inter-State

trade if it occasions movement of the goods from one State to another, and the

other is that a sale or purchase takes place by transfer of documents of title

during the movement of goods from one State to another. (see para 11)

The question whether a particular sale is an inter-State sale or an intra-State

sale, though essentially one of fact, is not a pure question of fact inasmuch as the

facts of a given case have to be examined in the light of section 3 of the Central Sales Tax Act, 1956; and, therefore, it is a mixed question of fact and law. (see para 11)

The dividing line between sales or purchases under section 3(a) and those

falling under section 3(b) is that in the former case the movement is under the

contract, whereas in the latter case the contract comes into existence only after

the commencement and before the termination of the inter-State movement of

the goods. Therefore, it follows that an inter-State sale can either be governed

by section 3(a), if it occasions movement of goods from one State to another, or

under section 3(b) if it is effected by transfer of documents of title after such

movement has started and before the goods are actually delivered. In other

words, a sale which takes place under section 3(a) is excluded from the purview

of section 3(b) and vice versa. (see para 11)

(iii) 3B Mitsubishi Corporation India Private Limited Vs. Value Added Tax Officer and another (2010) 34 VST 417 (Del-2Judges)

-09--,314E 11I-1650/2012/tIT

Central Sales TAx- Examption- Second or Subsequent inter state sale-sale

effected by transffer of document of title to goods during their movement from one state to another Entitled to exemption if conditions stipuled with -That first

sale exempt not relevant-Central Sales tax Act (74 of 1956) s,6(2)

In order to attract section 6(2) of the Central Sales TAx Act, 1956 it is essential that the sale concerned must be a subsequent inter state sale effected by transfer of documents of title to the goods during the movement of the goods form one

another and it must be preceded by a prior inter-state sale, when the conditions specified in section 6(2) of the Central Sales Tax Act, 1956 whether in teh main provision or in the provisos, are all satisfied the dealer would be entitled to

exemption on the second or subsequent inter-state sale, irrespective of the fact whether the first sale was exempted or not."

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S.No. 1113 : CCT Circular F.1 1(3)/Tax/CCT/97/Pt,/901 dated 19.07.1999

Various tarade associations have represented that after the issuance of circular

dated 16.09.1997 (S.No. 917), the assessing authorities are re opening the cases

even for the period earlier to the issuance of the circular i.e. 16.09.1997. These

associations have submitted that as per the then prevalent trade practices, the sales under section 6 (2) of the CST Act were effected even beyond the period of thirty days as restricted by the above referred circular Re opening of such

cases exclusively on this account has resulted in adverse impact on trade and causing undue hardship to bonafide transactions. In view of this, request has been made by these associations to give prospective operation to the said circular. This matter has been examined in the Department and it is, hereby, clarified that the above mentioned circular will be applied prospectively.

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