Subsequent sale while goods in transit

The respondent, dealer registered both under the Karnataka Sales Tax Act, 1957 and the Central Sales Tax Act, 1956, was engaged in supply of goods and also undertoook works contracts. It filed revised annual returns under the KST Act, showing nil taxable turnover under the Central Act. The assessing authoirty levied the tax at four per cent in respect of the goods covered by C forms and at 10% in respect of the goods not covered by C forms and levied penalty upon the respondent under section 12B(4) of the KST Act, rejecting the respondent's claim that the supply of goods to Karnataka Power Transmission Corporation Limited [KPTCL] was a trnasit sale covered under section 3(b) and 6(2) of the Central Act and holding that it was inter-state sale under section 3(a) of the Central Act. The first appellate authority confirmed the order of the assessing authoirty. On appeals, the Sales Tax Tribunal allowed the appeals and directed the assessing authoirty to issue a revised demand notice after due credit to tax deducted at source. On appeal by the Department. Held, (i) that the respondent-dealer had entered into contract with KPTCL for supply of capacitor banks to be erected at various locations in the State of Karnataka. The goods were manufactured at Chennai in accordance with the specifications mentioned in the contract with the respondent and the goods were delivered to KPTCL in execution of the contract. The lorry receipt clearly mentioned the name of the consignor as KPTCL. The sale of goods in favour of KPTCL was completed when the goods were appropriated by KPTCL before commencement of the movement of goods from the manufacturer's place at chennai to KPTCL in Karnataka. Therefore the Inter-State sale of capacitor banks fell under section 3(a) of the Central Sales Tax Act, and not under section 3(b) of the CST Act. (ii) That since delivery of goods of capacitor banks to KPCl was made in Karnataka on the basis of the terms and conditions of the contract entered into with the respondent, a registered dealer, by the Corporation and the goods manufactured to the specifications of KPTCL were delivered to the Corporation, which was at Karnataka State, the provisions of the proviso to section 9(1) of the Central Act were attracted and not section 6(2) of the Central Act. the assessing authority and first appellate authority had rightly held that the Karnataka State was the appropriate state entitled under the provisions of the Central Act to recover sales tax in respect of the goods sold to KPTCL by the registered dealer.