Report No. 61

3.3. Section 2(g) C.P. and Berar Sales Tax Act, 1947 and its construction by the Supreme Court.-

The matter is illustrated by section 2(g) of the C.P. and Berar Sales Tax Act, 1947 (as then in force), which provided1 as follows:

"'sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge.

Explanation (II).-Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made, shall, wherever the said contract of sale is made, be deemed for the purpose of this Act to have taken place in the Central Province and Berar."

1. See Anwar Khan v. State of Madhya Pradesh, AIR 1970 SC 1765.

3.4. This Act was enacted in exercise of the powers conferred upon the Provincial Legislature by the Government of India Act, 1935, 7th Schedule Provincial list-Entry 48. In exercise of that power, the Legislature was competent to enact a law for levying sales tax acting on the principle of territorial nexus, i.e., the province could fix upon one or more ingredients of sale, and make it the foundation for imposing liability for sales tax. The Provincial Legislature, relying upon either the manufacture of the goods within the province, or the existence of the goods at the date of the contract of sale within the province, or the making of the contract of sale within the province, as the basis, could provide for levying sales tax. "Sale" within the territory was not a condition of the exercise of the power to levy sales tax.1

1. See Anwar Khan v. State of Madhya Pradesh, AIR 1970 SC 1756: 26 STC 381.