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TMI Blog1991 (3) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was transported in trucks to Kerala and a part of the consignment was sent to the depots of the petitioner situated at various places in Kerala and part of the consignment was despatched direct to its customers in Kerala. Such despatches made to the customers directly from the Mangalore port to various places in Kerala where the customers were evidenced by despatch orders. A few samples of the orders placed by the customers in Kerala are produced along with the writ petitions. The petitioner has an office in Mangalore and is a registered dealer under the Karnataka Sales Tax Act, 1957 (the Act), but has not registered under the Central Sales Tax Act, 1956, in Mangalore. The petitioner had filed returns before the respondent for the years ending March 31, 1983 and March 31, 1984. A notice was issued to the petitioner on December 29, 1987, calling upon the petitioner to file returns under the Central Sales Tax Act. In continuation of the said notice, two proposition notices, as per annexures F and G, were issued by the respondent on February 17, 1988, proposing to conclude the assessments under the Central Sales Tax Act for the years ending March 31, 1983 and March 31, 1984. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners had necessarily to transport the cement imported from Mangalore to Kerala and the ship had to call at Mangalore port only by accident and not under a contract. Out of the cement so unloaded at Mangalore port, a part of it was sent to its depots and godowns in various places in Kerala and part of it was sent directly to the customers in Kerala who had placed orders for supply. It was, therefore, contended that the despatches of cement in lorries made by the petitioner to its customers in Kerala from Mangalore did not constitute inter-State sale and, therefore, does not attract Central Sales Tax Act. The two proposition notices are, therefore, challenged on various grounds raised in the writ petitions. Elaborating the contentions on behalf of the petitioner, it was argued by Sri K.R. Prasad: (i) that the movement of goods commenced in Korea and Taiwan as soon as the cement was loaded in the ship and the Mangalore port was the only a port of transit or an intermediate port in the transit of goods from foreign countries, to Kerala; (ii) that the movement of goods from Mangalore to Kerala was not caused by any sale or purchase in order to attract the provisions of section 3(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on facts, it was found that it was the intention of both the buyer and the seller that the trucks manufactured by the Tata Engineering and Locomotive Co. Ltd., should be delivered at places outside the State of Bihar. Such supply was made in accordance with the terms of the contract between the parties. The Supreme Court applied the principles enunciated in the three decisions rendered earlier in (page 149): Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer [1964] 15 STC 753 (SC); KG. Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes [1966] 17 STC 473 (SC) and Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 STC 354 (SC), and reiterated the same thus: "The decided cases establish that sales will be considered as sales in the course of export or import or sales in the course of inter-State trade and commerce under the following circumstances: (1) When goods which are in export or import stream are sold; (2) When the contracts of sale or law under which goods are sold require those goods to be exported or imported to a foreign country or from a foreign country as the case may be or are required to be tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent, that his action to levy Central sales tax on the petitioner, was justified. On the question of jurisdiction, the ratio of the Supreme Court in Commissioner of Sales Tax v. Suresh Chand Jain [1988] 70 STC 45, was relied upon by the learned counsel. The Supreme Court laid down, dismissing the petition of the Commissioner, that a condition precedent for imposing sales tax under the Central Sales Tax Act, 1956, was not satisfied in that case, and that the onus lies on the Revenue to disprove the contention of the dealer that a sale is a local sale and to show that it is an inter-State sale. On behalf of the Revenue it was argued by Sri Dattu, the learned Government Advocate, that from the facts set out and the material found in the show cause notices, the action of the respondent to levy Central sales tax on the petitioner was perfectly justified. It was contended by Sri Dattu that there was sufficient material, on record and the information collected from these materials by the department justified the levy of Central sales tax, on the petitioner. It was submitted, in all fairness, by the learned Government Advocate that only the despatches made directly to the customers fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate to another in order to discharge the obligation under the contract of sale, the interposition of an agent of the seller who may temporarily intercept the movement ought not to alter the inter-State character of sale." The learned Government Advocate also distinguished each one of the decisions relied upon by Sri K.R. Prasad, the learned counsel for the petitioner, and submitted that there was enough material and evidence on record to justify the proposed levy. Let me now advert to the decision of the Supreme Court in Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301; AIR 1985 SC 1754, since in my opinion, the Revenue must succeed or fail on the applicability of the tests laid down by the Supreme Court. Sri Pathak, J. (as lie then was), to the facts of the present case. The assessees in that case had challenged, by way of a writ petition under article 32 of the Constitution, the assessment order made for the year 1979-80 and the proposed action to reopen the assessment for the years 1977-78 and 1978-79. The facts arising in that case are summarised in para 7 of the judgment. The branch offices of the petitioner-company situated outside the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales, despatching, billing and receiving of the sale price, the conclusion must be that the order placed by the buyer is an order placed with the company, and for the purpose of fulfilling that order the manufactured goods commence their journey from the registered office within the State of Andhra Pradesh to the branch office outside the State for delivery of the goods to the buyer. We must not forget that both the registered office and the branch office are offices of the same company, and what in effect does take place is that the company from its registered office in Hyderabad takes the goods to its branch office outside the State and arranges to deliver them to the buyer. The registered office and the branch office do not possess separate juridical personalities. The question really is whether the movement of the goods from the registered office at Hyderabad is occasioned by the order placed by the buyer or is an incident of the contract. If it is so, as it appears no doubt to us, its movement from the very beginning from Hyderabad all the wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier three decisions in: (a) Union of India v. KG. Khosla and Co. Ltd. [1979] 43 STC 457, and the two decisions for covering the opposite situations in: (b) Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 STC 354; (c) State of Bihar v. Tata Engineering and Locomotive Co. Ltd. [1971] 27 STC 127. It is the settled law as to when a sale becomes an inter-State sale as enunciated by the Supreme Court in a series of decisions right from the first Tata case in the year 1960 ([1960] 11 STC 655), and reiterated in the second and third Tata cases reported in [1970] 26 STC 354 and [1971] 27 STC 127 and reiterated in the subsequent decisions, viz., (i) English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475; (ii) Union of India v. KG. Khosla and Co. Ltd. [1979] 43 STC 457; and (iii) Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301; AIR 1985 SC 1754. To sum up the ratio of the various decisions mentioned above, the position of law or the ratio that emerges from the interpretation placed by the Supreme Court in those decisions is this: (i) that an inter-State sale takes ..... 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