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TMI Blog1990 (9) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... ted January 21, 1980, it was proposed to assess the said turnover at 10 per cent and the petitioners were called upon to submit their objections. In the objections, the petitioners contended that the goods, ossein, were only stock transferred to Cochin branch and that they remained unascertained goods at the point of transfer and that at the time of movement, there was no specific concluded agreement. Alternatively, it was contended that the sales were export sales. The assessing authority rejected the objections and held that the turnover was liable to be taxed under section 3(a) of the CST Act at 10 per cent in respect of the turnover of Rs. 25,92,061.83. In respect of the turnover of Rs. 1,42,550.12, the rate of 4 per cent was applied because valid "C" form declarations had been filed. On appeal to the Appellate Assistant Commissioner, it was held that the goods moved from Uthagamandalam to Cochin only in pursuance of the contract of sale entered into between the petitioners and RIL, Bombay, but the matter was remanded back to the assessing authority to entertain "C" forms by giving opportunity to the petitioners. On further appeal, the Tribunal confirmed the order of the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the delivery challans and the shipping bills or customs documents either for the quantity or in respect of the period of shipment. This suggests that the movement of goods was not against any particular order. 3.. We will deal with the facts of the case in Tax Case (Revision) No. 158 of 1981. During the year 1975-76, there were ten shipments by way of exports. Of these ten shipments, two items were directly exported by the petitioners and the balance of eight items were routed through M/s. RIL, Bombay. The assessments relate only to the quantity of ossein transferred from Uthagamandalam to Cochin to give effect to the eight items of shipments routed through M/s. RIL, Bombay. On January 8, 1975, M/s. RIL, Bombay, placed orders for 166.47 tonnes on the petitioners for effecting export sales to M/s. Inter Mas Ltd., England. According to the respondents, against the said order dated January 8, 1975, the petitioners had moved goods from Uthagamandalam to Cochin on March 25, 1975, March 26, 1975, March 27, 1975, March 28, 1975, April 12, 1975, April 15, 1975 and April 16, 1975. Similarly to give effect to an order from Tvl. Audel Industries Corporation, New York, M/s. RIL, Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Ltd. ("STC of India Ltd."). The STC of India Ltd., apart from allotting the cement produced within Madras State, had also directed the assessee in that case to send large quantities of cement to Calcutta. The assessee in that case was making shipments from the port at Cuddalore to Calcutta in the name of its branch at Calcutta., For the years 1960-62 the shipments were made on April 25, 1961, December 19, 1961, January 14, 1962, January 22, 1962, February 17, 1962 and March 18, 1962. The assessees' branch at Calcutta cleared the goods and authorised their shipping agents to deliver to the respective allottees such quantities of cement fixed by the State Trading Corporation of India Limited under the letters of allotment issued to such purchasers. It was argued in that case that the goods were unascertained until they were appropriated at Calcutta. The following observations are important: "Whereas section 3 of the Central Sales Tax Act makes a sale of ascertained goods exigible to tax by the despatching State by reason of the movement of the goods having been occasioned under the contract, in the case of unascertained goods the despatching State has no jurisdiction to treat it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It will be enough if the movement is in pursuance of and incidental to the contract of sale." In Kelvinator of India Ltd. v. State of Haryana [1973] 32 STC 629 (SC), the assessee had a factory at Faridabad in Haryana. It manufactured refrigerators, deep-freezers, compressors and other similar articles. It had a registered office at New Delhi. The assessee also had godowns at Delhi. The entire sale of refrigerators, compressors, etc., were made to Spencer Co. Ltd. at Delhi. On April 26, 1965, the assessee entered into distribution agreements with three companies selling refrigerators under three different brand names called "Kelvinator", "Leonard" and "Gem". The refrigerators manufactured at Faridabad were transferred to the sales office at Delhi under despatch notes. The distributors placed their specific orders on the Delhi office and bills were also issued by the sales office at Delhi. The assessing authorities in that case held that the movement of refrigerators from Faridabad to Delhi was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the distributors were not agreements of sale and that there was no movement of refrigerators from Faridabad to Delhi under a contract of sale. 5.. In South India Viscose Ltd. v. State of Tamil Nadu [1981] 48 STC 232, the Supreme Court observed as follows: "In order to constitute an inter-State sale as defined in section 3(a) of the Act, two factors should co-exist-(i) a sale of goods and (ii) movement of goods from one State to another under the contract of sale. If there is a conceivable link between a contract of sale and the movement of goods from one State to the other 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 the sale." It was held in that case that there was clear evidence of the existence of prior contract of sale as per the terms of the allocation card. 6.. In Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457 (SC), it was held that the movement of the goods was occasioned from Faridabad to Delhi as a result or incident of the contracts of sale made in Delhi. It was observed: "It is true that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual assertion of the High Court. The Supreme Court further observed: "The Assistant Commissioner himself found that sometimes the vehicles were sent from the works at Jamshedpur even before an allocation letter had been issued. It would appear from the materials placed before us that generally the completion of the sales to the dealers did not take place at Jamshedpur and the final steps in the matter of such completion were taken at the stock-yards. Even if the appellant took into account the requirements of the dealers which it naturally was expected to do when the vehicles were moved from the works to the stockyards it was not necessary that the number of vehicles allocated to the dealer should necessarily be delivered to him. The appropriation of the vehicles was done at the stock-yards through specification of the engine and the chassis number and it was open to the appellant till then to allot any vehicle to any purchaser and to transfer the vehicles from one stock-yard to another. Even the Assistant Commissioner found that on some occasion vehicles had been moved from a stockyard in one State to a stock-yard in another State. It is not possible to comprehend how in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cause of what apparently looks to be inconsistent decisions. Since the application of the law will ultimately depend upon the facts of the case, we would once again look into the facts of the case with reference to the authorities cited above. If the assertion of the Appellate Assistant Commissioner stating that each order placed by M/s. RIL, Bombay, on the petitioner-company was followed by despatch of goods from Uthagamandalam to Cochin is proved, we have no doubt that the Revenue has a good case. On the other hand, learned counsel for the petitioners submits that the petitioners had filed before the Appellate Assistant Commissioner, a chart for the two assessment years, viz., 1974-75 and 1975-76 showing the date of orders, the date of despatch of goods from Uthagamandalam to Cochin, the stock of goods on the date of each shipment, etc. It is argued by the learned counsel for the petitioners that the Appellate Assistant Commissioner has merely taken the despatch of goods on all dates subsequent to a purchase order as being goods despatched in pursuance of the said purchase order. What is pointed out by the learned counsel for the petitioners is that the despatches had taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o come to the conclusion that the order dated January 8, 1975, for 300 tonnes occasioned the movement of goods from Uthagamandalam to Cochin on March 25, 1975, March 26, 1975, March 27, 1975, March 28, 1975, April 12, 1975, April 15, 1975, and April 16, 1975 amounting to a total of 45.690 tonnes. The figures do not tally. The same is the story in respect of all orders referred to by the Appellate Assistant Commissioner. On the other hand, the explanation of the petitioner fits in with the actual despatches being regular without reference to orders from M/s. RIL, Bombay. As and when orders are received by Uthagamandalam office, the goods already accumulated in Cochin were being shipped. In fact from the chart, we see that for a particular period there was no purchase order from M/s. RIL, Bombay but the despatches were continuing as and when ossein were manufactured. 10.. Learned Government Pleader refers us to clauses 6 and 7 of the collaboration agreement dated July 4, 1965 between M/s. RIL, Bombay and Compagnie Rousselot. Under the said clauses, the foreign company had undertaken to sell or take up for their own consumption 950 tonnes of ossein per annum. The Indian company whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next order. We have already noted that irrespective of orders, despatches were being made to Cochin. 11.. The facts of the case in Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 STC 354 (SC), Madras Rubber Factory Ltd. v. Joint Commercial Tax Officer [1972] 30 STC 96 (Mad.), Kelvinator of India Ltd. v. State of Haryana [1973] 32 STC 629 (SC), India Pistons Ltd. v. State of Tamil Nadu (1984) 10 STL 92 (Mad.) and Ashok Spares v. State of Gujarat (1984) 10 STL 239 (Guj) (Trib) and the ratio laid down therein more aptly applies to the facts of the present case. 12.. We are, therefore, obliged to hold that the turnover involved in the reopening of assessment does not comprise inter-State sales, within the meaning of section 3(a) of the CST Act. 13.. The fact that the Kerala authorities considered the matter and held that there was no assessable turnover or that they are reopening the matter cannot be of any decisive value in determining the question involved in this case. 14.. We, therefore, hold that the assessing authorities and the Tribunal were not right in holding that the goods in question were transferred to Cochin in purs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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