1992 (9) TMI 330 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the supplies of cement made to the K.C.P. Sugar Factory and K.C.P. Engineering Works are "sales" under the APGST Act and CST Act.

Summary:

Issue 1: Whether the supplies of cement made to the K.C.P. Sugar Factory and K.C.P. Engineering Works are "sales" under the APGST Act and CST Act.

The High Court of Andhra Pradesh addressed eight tax revision cases concerning disputed turnovers for the assessment years 1975-76 to 1978-79 under the APGST Act and CST Act. The petitioner, a division of K.C.P. Limited, transferred cement to its other units without issuing invoices, but debited and credited the costs in the accounts, including sales tax.

The Commercial Tax Officer treated these transactions as "sales" and levied taxes accordingly. The Tribunal upheld this view, stating that the transactions involved transfer of property in goods for consideration, as reflected in the accounts.

The petitioner argued that since all units are divisions of a single company, there was no transfer of property from one person to another, a necessary condition for a sale. The Tribunal's reliance on the accounting treatment and separate registration under the Sales Tax Acts was challenged.

The Court emphasized that a sale involves a transfer of property between two distinct legal entities. Since the units are integral parts of K.C.P. Limited, there was no transfer of ownership. The Court cited precedents, including the Supreme Court's observations in *Sahney Steel and Press Works Ltd. v. Commercial Tax Officer* and *English Electric Company of India Ltd. v. Deputy Commercial Tax Officer*, to support the view that branches or units of a company do not possess separate juridical personalities.

The Court concluded that the transfer of cement between the units did not constitute a sale, as there was no transfer of property from one person to another. The registration under the Sales Tax Acts and the accounting treatment did not alter the fundamental nature of the transactions.

The Court set aside the Tribunal's order, allowing the tax revision cases and ruling that the transfers were not sales under the APGST Act and CST Act. The petitions were allowed without costs.