Summary
Tax authorities could not prescribe a retention period after which goods lying with a carrier at destination were deemed constructively delivered, thereby denying the subsequent inter-State sale exemption. Section 3’s first explanation ties termination of movement to taking delivery and specifies no time limit. The circulars impermissibly supplied words to the statute. Section 51 of the Sale of Goods Act did not assist the Revenue because no carrier acknowledgment of holding for the buyer was shown.
Issues
- Whether administrative circulars could deem delivery after a prescribed retention period.
- How termination of movement under Section 3 affected the Section 6(2) exemption.
- Whether the Sale of Goods Act supported termination of transit on the facts.
Provisions considered
- Section 3(b), Explanation 1; Section 6(2), Central Sales Tax Act, 1956Rejected a circular-created constructive-delivery deadline for otherwise compliant subsequent sales by transfer of title documents during movement. (¶¶ 1, 9, 10, 11, 12, 15)
- Section 51(1) and 51(3), Sale of Goods Act, 1930Found no material showing acknowledgment by the carrier that it held the goods as bailee for the buyer, and hence no assistance to the Revenue. (¶¶ 13, 14)
Held
- Where goods are delivered to a carrier for transmission, the statutory fiction starts movement at that delivery and ends it when delivery is taken from the carrier. It contains no timeframe; the tax administration could not impose a ten-day or thirty-day cut-off to deem movement ended. (¶¶ 11, 12, 15)
- The only asserted default was prolonged retention in the transporter’s destination godown; compliance concerning forms and certificates was otherwise unchallenged. Administrative assumptions about constructive delivery could not displace the statutory test and defeat exemption on those facts. (¶¶ 9, 10, 11, 12, 15)
- Section 51(3) concerns acknowledgment by the carrier to the buyer or agent that it holds goods on their behalf. No such acknowledgment was established here, so that provision did not support the Revenue’s case. (¶¶ 13, 14)
- The contrary interpretation in Arjan Dass Gupta did not state the correct law. Authorities cannot add words based on perceptions of trade practice to cure perceived legislative omissions; any required correction to the statutory scheme must be legislative. (¶ 15)
Result
All four Revenue appeals dismissed; High Court judgments left undisturbed. Connected applications disposed of without costs.