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2017 (1) TMI 746 - BOMBAY HIGH COURTValidity of assessment order - situs of the inter-State sale - liability of the dealer to pay tax to a particular State - orders for the supply of Brahmos Missiles are from the Defence Ministry to the head office at Delhi. Accordingly, the components are imported from Russia and stored at Nagpur. As per the delivery schedule, the components are transferred to Hyderabad works for the purpose of job work of assembly and fixing on the SKD articles. The semi finished job is then transferred to Nagpur works from Hyderabad for carrying out warhead integration and final assembly of the Brahmos Combat Missiles, its final sealing on excise job work challan. After carrying out leak test and electrical checks, the fully finished Combat Missile is cleared from Nagpur and despatched to various locations outside the State of Maharashtra without making payment of excise duty with prior permission of the Commissioner of Central Excise as per the provisions of Rule 16B of the Central Excise Rules - the understanding of the assessing officer is that the petitioners have attempted to establish that the movement of goods from Hyderabad to Nagpur is in accordance with the contract for supply of Combat Missiles to the Armed Forces. Held that: - The assessing officer holds that the movement of semi finished goods from Hyderabad to Nagpur cannot be construed as a mere stop over in the inter-State movement as projected by the petitioners/dealer. The final product was appropriated at Nagpur in the form of a missile as per the contract entered with Armed Forces, which is despatched from Nagpur to the customer after pre-delivery inspection. - The assessing officer concludes that both situs of sales and appropriation of the goods is effected within the State of Maharashtra. Hence, the Maharashtra State is the appropriate State for the purpose of levy and collection of the Central Sales Tax on the transactions. It is on that footing that the assessment order has been passed. There is a fundamental error, in the understanding of the assessing officer, of the provisions of the Central Sales Tax Act, 1956. We had to elaborately analyse the provisions only for clearing certain doubts of the authorities, particularly in the State of Maharashtra. They have failed to notice the salient features of the Central Sales Tax Act, 1956. In our view, the understanding of the assessing officer that it is the movement of finished goods, which would be the determining and conclusive factor is legally flawed. It is untenable, inasmuch as the presumption that all the decided cases speak about and dealt with movement of finished goods from one State to another and not semi finished goods. It is this erroneous presumption that has resulted in a conclusion completely vitiated in law. There is non application of mind to very crucial and relevant factors, which govern the applicability of the Central Sales Tax Act to the inter- State trade and commerce. The movement of goods has been made pursuant to an agreement of sale with the President of India. The Ministry of Defence receives the missiles for use in times of war and also for training. Once the matter is covered by the judgment of the Hon'ble Supreme Court of India and noted above, then, we do not think that any other view is possible. Once the Hon'ble Supreme Court of India [1996 (4) TMI 419 - SUPREME COURT OF INDIA] has clarified that this is not a tax which could be said to be levied in its true sense by the State Government, it is only the Central Sales Tax, which has to be collected and the authority in that regard was in issue. Hence, we do not see any justification in law for the distinction made by the assessing officer about the goods being brought in semi finished or finished status. In the facts and circumstances, such a dispute does not arise. It is agreed that the petitioners manufactured missiles. These missiles are manufactured at the unit at Hyderabad. These missiles, only for warhead integration, are brought to Nagpur. The issue raised was that without warhead integration, the missile is not complete and cannot be used to target any particular place or point. The argument was that the components imported from Russia are brought to Nagpur, but the Revenue could not prove that the entire missile is manufactured at Nagpur. That the unit at Hyderabad assembles these components brought from Russia and makes a missile. Once the missile is the identifiable goods and it is in that form that it is sold, but the issue is whether the warhead integration makes it a different or distinct article or goods, then, we do not think any assistance can be derived from the judgment of the Andhra Pradesh High Court [2011 (4) TMI 1010 - Andhra Pradesh High Court]. That is distinguishable on facts. Once we have held that there is a fundamental and basic legal error so also the assumptions on the part of the assessing officer being untenable in law, we do not think that the writ petition cannot be entertained. There may be remedies available to challenge the assessment order, but it is not that there is any absolute bar to entertain a writ petition under Article 226 of the Constitution of India against an assessment order. Once that assessment order is found to be vitiated in law and the assessing officer exceeding his powers, authority and jurisdiction, then, in the absence of a factual dispute, a writ petition would lie. In the present case, we have entertained it to correct the legal error. Writ petition allowed - decided in favor of appellant.
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