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Report No. 30

107. Caltex case and Singareni case.-

Reference may also be made to a case decided by the Supreme Court in December, 1965 1 where these were the facts. Pursuant to a contract between the Director General of Supplies, Delhi and the assessee for the supply of petrol to the State Mechanized Farm at Nandpur in the State of Jammu and Kashmir, the officer-in-charge of the Nandpur Farm placed indents with the assessee's depot at Pathankot in the Punjab State. The assessee transported petrol from Pathankot to Nandpur under the contract of sale.

The petrol was kept in the storage depot of the assessee at Pathankot, and was carried in the assessee's truck and delivered to the farm at Nandpur. The price of the petrol so supplied was paid to the assessee at Delhi, by the Director General of Supplies. On these facts, the Supreme Court held, that there was a movement of goods from the State of Punjab to the State of Jammu and Kashmir under the contract of sale, and there was completion of sale by the passing of property to the purchaser.

The transactions of sales between the parties were "in the course of inter-State trade". This was also the finding of the High Court, and it was not seriously challenged on behalf of the State of Jammu and Kashmir.

Therefore, under Article 286(2) of the Constitution, as it stood before the amendment, sales-tax could not be imposed by the State of Jammu and Kashmir on the petrol so supplied by the assessee, under the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act2.

Thereafter, in a case of 1966 3, the test movement of goods being the result of a covenant or incident of the contract of sale was adopted, in relation to section 3 of the Central Sales Tax Act (inter-State Sales).

1. State of Jammu and Kashmir v. Caltex India Ltd., (1966) 3 SCR 149 (156): 17 STC 612 (Issue dated 15th June, 1966): AIR 1966 SC 1350 (September issue), on appeal from AIR 1962 J&K 89.

2. Jammu and Kashmir Motor Spirit (Taxation of Sales) Act, 2005, (1948).

3. Signareni Collieries Co. v. Commissioner of Commercial Tax Hyderabad, 17 STC 197: AIR 1966 SC 563 (570), (April 1966 issue), on appeal from AIR 1962 AP 75 (83), para. 44: 12 STC 765 (777).



Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back




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