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TMI Blog2013 (12) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... , or for that matter, a certificate had been issued by STC that MRF Limited, Kottayam and Goa had purchased natural rubber from STC, however, would not, in any manner, make the transaction an inter-State sales; that the authorities rightly came to the conclusion that the movement had nothing to do with the transaction of sale. The application of the delivered raw rubber to any particular Unit outside the State is a matter of choice and the discretion of the assessee and the seller, at no point of time, was involved in this. As is evident from the original allocation order, the price charged by STC for Chennai and Kottayam, Kerala are totally different. However, on the revised order, the price charged for RSS-3, now allotted to Kottayam, however, remained the same as for Chennai. As rightly contended by the learned Special Government Pleader, we can only construe the allocation order dated 16.08.1991 as carrying out the request of the assessee for delivery at Kottayam, which cannot be treated as the same as the assessee having originally entered it as RMA-5 - Kottayam. Thus the delivery instruction given cannot be construed as forming part of the sale transaction as indicated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable under the Tamil Nadu General Sales Tax Act. The payment of sales tax at 4% on the 'C' Form produced, did not alter the character of the transaction. He further pointed out that on receipt of the allocation order, the Manager Purchases (Import) of the assessee company, addressed STC, enclosing the Demand Draft towards the value of the consignment allotted, requesting STC to issue delivery order, mentioning the place of despatch. On receipt of the intimation, STC issued delivery orders to the assessee to take delivery of the raw rubber from STC's warehouses at Madras. From the above, the Assessing Officer came to the conclusion that transaction could not be treated as inter-State sale. The assessee resisted the proposal and submitted that it purchased natural rubber locally as well as through STC and that pursuant to the allotment order, there had been movement of goods from Chennai to Kottayam and Goa. The assessment had already been made on STC under the Central Sales Tax Act. Consequently, the question of a change in the character of the transaction as a local sale did not arise. In this connection, the assessee placed reliance on the decision reported in [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n went on appeal before the various forums. The Tribunal confirmed the order of assessment as well as the First Appellate Authority's order. Thus as against the order of the Tribunal in respect of the assessment year 1989-90, T.C.No.1717 of 2008 is now before us. So too, as against the order dated 02.08.1996, which went on appeal before the Tribunal, T.C.No.2115 of 2006 has been filed. Apart from these two years, there is yet another assessment, which was the subject matter of appeal before the Authorities below, now before us in T.C.No.2212 of 2008. The assessment made relates to the assessment year 1991-92. Except for a mere variation in facts that the allotment order in respect of the assessee underwent a change to include Kottayam as a separate account, the facts are identical as relating to the assessment year 1989-90. STC was assessed on the turnover under the Central Sales Tax Act. The assessee also stated that the assessments at the hands of STC as inter-State sales remained unchallenged. The Tribunal ultimately rejected the contention of the assessee. 7. A perusal of the order of the Tribunal shows that considering the character of the sale, the description under En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala Transport Company. Considering the fact that the assessee had not obtained any allotment order or allocation order speaking about specific allotment, the claim of the assessee could not be sustained. As regards the furnishing of 'C' Forms, the Tribunal pointed out that when the purchases were made by the assessee as one Unit, the branches and factories being the limbs of the assessee, the mere furnishing of 'C' Forms would not alter the character of the transaction from an intra-State sale to an inter-State sale. On facts, the Tribunal found that there was no obligation on the part of STC to move the goods from Tamil Nadu to Kerala or Goa. The concern of STC was that the goods were to be lifted from its Ex-godown within the time frame and thereupon, the responsibility of STC ceased. There was no obligation cast on STC to move the goods in pursuance of the contract, either implied or express. In the absence of any specific arrangement between the assessee and STC, as the movement was made by the assessee after taking delivery, the transaction could not be assessed as an inter-State sale under the Central Sales Tax Act. The Tribunal observed that there was no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be said to have taken place. In the facts of the case, only when delivery was effected for the particular quantity, there was an appropriation of the goods under the contract for the particular Unit of the assessee, which resulted in the movement of goods from this State to outside the State. Movement and delivery were inseparably connected, to satisfy the conditions under Section 3(a) and rightly, the assessment was made by STC under the Central Sales Tax Act. He further pointed out that the assessment made on STC under the Central Sales Tax Act had become final and the Department had collected 4% tax based on the 'C' Form furnished by the assessee. Placing reliance on the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)) and [2007] 7 VST 214 (State of Orissa Vs. K.B.Saha Sons Industries Pvt. Ltd.), learned counsel submitted that the Apex Court decisions directly covered the case on hand in petitioner's favour. Thus, pointing out to the assessment at the hands of STC under the Central Sales Tax Act, the question of treating the self same turnover as escaping further assessment at the hands of the assessee un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder speaking on the sale thus carrying the destination as Kottayam, the movement had to be necessarily treated as an incidence of sale; consequently, the order of the Tribunal has to be set aside. 12. Per contra, learned Special Government Pleader appearing for the Revenue, pointed out to the circumstances under which the assessment had been made at the hands of the assessee. Supporting the order of the Tribunal confirming the order of assessments, as far as the assessment for the assessment year 1991-92 is concerned, he submitted that the letter written by the assessee on the allocation, however, is to be viewed only as a direction and that the movement of goods cannot be treated as a condition attached to the sale. As is evident from the letter dated 21.08.1991, the inescapable inference that one would draw is that the sale is only to MRF Limited, Chennai, and that the insertion of the name of Kottayam Unit is only for assessees' delivery purpose, which is not the same as a causal effect that one finds in an inter-State sale; consequently, no exception could be taken to the order of the Tribunal. 13. Heard learned counsel appearing for either side and perused the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, there could be no live link between the purchase and despatch of goods. Consequently, the movement would have been totally unconnected with the purchase, that there could not have been an inter-State purchase. However, given the fact that the goods were purchased by the commission agent on behalf of UP principals, on despatch to such principals as per their direction, there being no break, the Apex Court held that the transaction could not be assessed as a local sale. 16. In the decision reported in [2007] 7 VST 214 (State of Orissa Vs. K.B.Saha Sons Industries Pvt. Ltd.), once again, the Apex Court reiterated the well settled principle and held that when in the tender document, there was a clear indication that the principal place of business and the additional place of business were all outside the State of Orissa, it was clear that the sale was an inter-State sale. To come to the said conclusion, the Apex Court reiterated the principle laid down in the decisions reported in [1976] 37 STC 207 (Balabhagas Hulaschand Vs. State of Orissa), [1963] 14 STC 175 (SC) (Cement Marketing Co. of India Vs. State of Mysore), [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives would constitute delivery and discharge of obligation on behalf of STC. It also states that the allottees were free to examine the goods in respect of quality and weight before taking delivery at STC's godowns. The said clause reserves the right to STC to supply rubber much less than what had been allotted and also have the right to cancel the allocation or suspend the delivery in part or in full. Even though learned counsel submitted that such a clause would indicate uncertainty as a concluded contract, we do not think, this would, in any manner, make the contract of a doubtful character. We reject the line of reasoning of the assessee that the delivery alone would make the contract a confirmed contract. The fact that STC has reserved the right to alter or cancel the allotment, however, does not touch on what the parties contemplated as regards the movement of goods. There is nothing on record to show that the parties intended on the facts of the case that allotment was intended to result in movement of goods to various branches of the assessee. 20. It is seen from the document dated 25.08.1989 that the allocation order was issued by STC to MRF Limited, 826, Anna Salai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-State sale. In the light of the above, the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)), in fact, advances the case of the Revenue that it is only a local sale, assessable under the Tamil Nadu General Sales Tax Act. 22. As far as the contention of the assessee that the assessment made under the Central Sales Tax Act to STC on the self-same turnover would estop the Revenue from making assessment on the assessee concern, we do not think, such a claim would, in any manner, assist the assessee. As already seen, in the Assessing Authority's judgment, the transaction's nature came to light based on the materials seized at the time of inspection made on 28.12.1989. The fact that STC had offered the turnover under the Central Sales Tax Act and the same was also assessed so, cannot tie the hands of the Assessing Officer to enquire further, to arrive at the correct inference as to the nature of the transaction and pass orders under the correct provision of the relevant Act, that the purchases made locally and the delivery instruction given subsequently were only local sales. The fact that STC had offered the turnover f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is now sought to be assessed at the hands of the assessee is already a subject matter of consideration at the hands of STC under the Central Sales Tax Act and tax had been collected at 4% by reason of the 'C' Form given by the assessee. Given the fact that, as per Entry 74 of the First Schedule, the same is assessable at 5%, there is a loss to the revenue to the extent of 1%. As held in the decision reported in [1990] 77 STC 162 (Trichur Cotton Mills Limited Vs. State of Tamil Nadu), herein too, it is not denied that STC had collected tax at 4% from the assessee and remitted it to the State. In the circumstances, even though the tax leviable on the assessee is 5% as a last purchaser, given the fact that the assessee had already paid 4% tax to STC and the same had been remitted to the State too, following the decision reported in [1990] 77 STC 162 (Trichur Cotton Mills Limited Vs. State of Tamil Nadu), in the interest of justice, this Court feels that the claim of the assessee merits consideration that on the assessment made, the Revenue should consider the adjustment of 4% tax remitted to the State by STC as one in compliance of the payment made by the assessee. Thus, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . STC-Madras will accept payment for RSS-3 SMR-20 only after receipt of confirmation from STC-Cochin. Yours faithfully, for The S.T.C. of India Limited, Sd/- xxx Deputy Marketing Manager. Copy by Registered post to: M/s.MRF Limited 826, anna Salai Madras-600 002. With the request that they may approach our Branch Offices for taking delivery of the material. the allocation is subject to terms conditions for allocation of Natural Rubber and undertaking given by them alongwith the application form. N.B. Lifting should be completed within 9 days from the date of payment. RMA-5 should be lifted first. 27. We find difference between the allocation order relating to 1989-90 and 1990-91 and there is a specific reference to what is allotted for Madras, Kerala and Goa. On 21.08.1991, the assessee wrote a letter to the Deputy Marketing Manager of the State Trading Corporation, which pointed out to the lifting of rubber and the quantity for their units, which we have already extracted in paragraph 11. 28. The letter requested the authorities to endorse the letter or alternatively, the Allocation Order copy, so that the same could be submitted to STC, M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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