9911796707
TMI Blog1992 (9) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,068 --------------------------------------------------------------------- The undisputed facts are that the petitioner is a division of the K.C.P. Limited, which is a public limited company having its registered office at Madras. The said company has at least three divisions or units, i.e., (i) K.C.P. Engineering Works, Madras, engaged in the business of manufacture and sale of machine tools; (ii) K.C.P. Sugar Factory, Vuyyur, engaged in manufacture and sale of sugar; and (iii) Ramakrishna Cements, Macherla (petitioner), carrying on the business of manufacture and sale of cement. Each one of them is separately registered as a dealer under the respective Sales Tax Acts. The petitioner, namely, the K.C.P. Limited (Ramakrishna Cements), Macherla, is a registered dealer within the jurisdiction of the Commercial Tax Officer, Piduguralla, Guntur district. The petitioner is registered under the APGST and CST Acts. The petitioner after obtaining the permits from the Cement Controller, transferred certain quantities of cement during the relevant years to the K.C.P. Sugar Factory, Vuyyur and K.C.P. Engineering Works, Madras, for the purpose of consumption by transferee units. No invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases. The learned counsel for the petitioner has reiterated before us the contentions urged before the Tribunal. He contends that there is no transfer of property in goods from one person to another, which is an essential ingredient of sale inasmuch as all the three units are only divisions of a single company which has a separate legal personality. He submits that neither separate registration under the Sales Tax Acts nor the accounting procedure adopted by the petitioner, does really make a material difference for the purpose of judging the question involved. The learned counsel also contended that for the subsequent years, the Sales Tax Appellate Tribunal dissented from the view expressed in the impugned order and held that supply of cement to the two units at Vuyyur and Madras did not amount to sale. The learned counsel placed particular reliance on Commissioner of Sales Tax v. Indokem Private Limited [1975] 35 STC 432 (Bom.), U.P. State Cement Corporation Ltd. v. Commissioner of Sales Tax [1979] 43 STC 476 (All.) and State of Orissa v. Orissa Road Transport Company Ltd. [1983] 53 STC 329 (Orissa). It may be noticed that in the later order of the Tribunal, reliance was placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, supplying or distributing goods, directly or indirectly, for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes- (i) a local authority, a body corporate, a company, any co-operative society or other society, club, firm, Hindu undivided family or other association of persons which carries on such business....". Section 12(2)(a) of the APGST Act, casts an obligation on every dealer carrying on business in all or any of goods mentioned in Schedules I to V, to get himself registered under the Act irrespective of the quantum of his turnover in such goods. We are not concerned with the exceptions envisaged thereunder. It may be noted that cement is one of the commodities specified in the First Schedule. Clause (d) of section 12(2) enjoins that a dealer having more than one shop or place of business other than a place used merely for the storage of goods, shall apply for registration and obtain a separate registration certificate in respect of each such shop or place of business. According to rule 29(1) read with rule 29(4), every registration certificate in respect of the dealer carrying on business in goods specified in Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her. In our opinion, it does not. It is not in dispute that the petitioner-a cement manufacturing unit at Macherla, the sugar factory at Vuyyur and the engineering workshop at Madras are all integral parts of the K.C.P. Ltd., having its registered office at Madras. M/s. K.C.P. Ltd., is a company incorporated under the Indian Companies Act. Undoubtedly, an incorporated company has a distinct legal personality. In Gower's Principles of Modern Company law, it is stated: "The fundamental attribute of corporate personality-from which indeed all the other consequences flow is that the Corporation is a legal entity distinct from its members. Hence, it is capable of enjoying rights and of being subject to duties which are not the same as those enjoyed or borne by its members. In other words, it has 'legal personality' and is often described as an artificial person in contrast with a human being, a natural person." The company may have several units or divisions located at different places engaged either in the same line of manufacture or trading or in different manufacturing or trading activities. Normally, the units or divisions will have no separate identity of their own, much less a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such registration shows that each unit is separate and independent of the other, and (2) the petitioner itself treated the transaction as a sale by effecting debit and credit entries in the accounts in respect of the cost of the cement despatched and that even sales tax was charged. We agree with the learned counsel for the petitioner that these factors by themselves do not invest the transactions in question with the character of sale within the meaning of section 2(n) of the APGST Act and section 2(g) of the Central Sales Tax Act. The registration under the Sales Tax Acts does not necessarily mean that the registered dealer becomes a separate legal entity different from its creator, viz., the company proper. It is to be remembered that the company-K.C.P. Ltd., has its registered office at Madras. It carries on business in Andhra Pradesh State through its two units, namely, cement factory and sugar factory. Both these units ought to be registered separately under the existing Rules. Rule 29(4) of the APGST Rules enjoins that every registration certificate shall cover one place of business only (other than a place used merely for storage of goods). Thus, even in a case where a sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on governing registration, both of them may be registered dealers. Separate registration certificates issued to the units or branches of an incorporated company have never been considered to be sufficient to confer the legal personality on such units and branches. In Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301; AIR 1985 SC 1754, the Supreme Court while discussing the question whether the transaction was an inter-State sale within the meaning of section 3(a) of the Central Sales Tax Act, observed: "It is urged that the registered office and the branch office were separately registered as dealers under the sales tax law and transactions effected by the branch office could not be identified with transactions effected by the registered office. The movement of the goods from Hyderabad to the branch office, it is said, was only for the purpose of enabling the sale by the branch office and was not in the course of fulfilment of the contract of sale. We are unable to agree. Even if, as in the present case, the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling dealer. The sales were made by the assessee to the Imperial Tobacco Company of India Limited. The said company with only one place of business in the town of Muzaffarpur was a registered dealer for the resale of cigarettes. The sales were made to the Imperial Tobacco Company of India Limited through its place of business in Calcutta but not at Muzaffarpur. Considering the definition of registered dealer in the Act read with the relevant rules, one of the learned Judges (Das, J.) rejected the contention that for the purpose of taxing statute, the company should be deemed to be one unit and the registration certificate issued to the company with its place of business at Muzaffarpur should be taken as a registration certificate to the company with all its places of business inside and outside Bihar. It was in that context the learned Judge observed: "If the provisions of section 7 are read with the rules made under the taxing statute, then it is clear that the only registered dealer within the meaning of the taxing statute of 1944 is the Imperial Tobacco Company of India, Limited, with its place of business at Muzaffarpur. One can easily realise the anomaly or difficulty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e general trading account while the so-called deposit was entered in a separate ledger termed "empty bottles return deposit account" for, what was a consideration for the sale, cannot cease to be so by being written up in the books in a particular manner'." Reference may also be made to the decision of the Supreme Court in [1970] 75 ITR 191; AIR 1970 SC 410 in Commissioner of Income-tax v. India Discount Co. Ltd., wherein it was observed: "It was said that the assessee had itself credited the amount of Rs. 43,925 to the profit and loss appropriation account and thereafter transferred the same to a reserve fund in the accounting year ending September 30, 1966. No adjustment was made in the share purchase account on account of the receipt of dividend. But it is well-established that a receipt which in law cannot be regarded as income cannot become so merely because the assessee erroneously credited it to the profit and loss account [See Commissioner of Income-tax v. Shoorji Vallabhdas and Co. [1962] 46 ITR 144 (SC)]." The first appellate authority referred to the fact that the sales tax was also charged while debiting the cost of cement to the account of the transferee-concern. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri V.D. Singh, with his usual ingenuity, urged that the transaction in question should not be treated other than sale, because the assessee had billed the Dalla Cement Factory and has charged the price of cement supplied by it. The billing of Dalla Cement Factory and the payment of price of the cement was only a method of accounting adopted by the two units owned by the State Government, and this method of accounting cannot alter the true character of the transaction: (See Commissioner of Income-tax v. Shoorji Vallabhdas Co. [1962] 46 ITR 44 (SC). The residuary contention made is that as both the units were registered dealers, they should be treated as separate entities for the purpose of the Act. So far as the Dalla Cement Factory is concerned, that was registered as a dealer in February, 1971............ So far as the assessment years from 1967-68 to 1969-70 are concerned, this argument is of no avail to the department. It is also inconsequential so far as the remaining assessment years are concerned, the reasons being that the registration of the Dalla Cement Factory as a dealer will entitle the department only to tax the turnover of Dalla Cement Factory separately; but will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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