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TMI Blog1999 (11) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the effect of the letters in its entirety on the movement of cashew kernels. This aspect of the matter was not considered by the respondent? 5.. Whether the first respondent was right in ignoring the fact that in the case of inter-State sale each and every transactions is to be examined by the authority and leave their findings on the same? 6.. Whether the respondent is right in holding that the transac- tions entered are clear sales in the course of inter-State sales ignor- ing the fact that there were transfers otherwise than by way of sale? 7.. Whether the respondent is right in observing that the inter- State movement was incidental to the order placed by Mahalsa Enterprises, Mangalore, and there is no evidence to say that said Sri Mohan Kamath acted as the representative when there was no orders from the said Mohan Kamath? 8.. Whether the first respondent was right in not examining the fact that "F" form can be availed of only by commission agents and not by dealers and when the consignee used the "F" forms, the same is for sales as agent and not as dealers? 2.. The facts of the case are that the assessee is engaged in the manufacture of cashew kernels. Assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (State of Tamil Nadu v. State Trading Corporation of India Ltd.) and [1968] 21 STC 312 (SC) (Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer) were referred. The revising authority under section 22-A found that the order passed is erroneous and prejudicial to the interest of revenue and set aside the appellate order. Learned counsel for the appellant submitted that in order to constitute an inter-State sale, there must be agreement and movement of goods in pursuance of such agreement from one State to another and then only it could be considered to be an inter-State transaction. 3.. Reviewing the decision in State of Bombay v. United Motors (India) Ltd. [1953] 4 STC 133 (SC), in Bengal Immunity Company Limited v. State of Bihar [1955] 6 STC 446 (SC), it was held that the State Legislature has no power to levy tax in respect of inter-State sale. This decision gave birth to the Central Sales Tax Act. Section 3 deals with inter-State sales and section 4 refers to the sales or purchases of goods which are said to take place outside the State and section 5 deals with sales or purchase of goods which said to take place in the course of import or export. Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sales Tax [1976] 37 STC 489 (SC) and Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457 (SC), were taken into consideration. It is observed in Bharat Heavy Electricals Limited v. Union of India [1996] 102 STC 373 (SC) at page 383 thus: "If a dispute arises in which State is the tax lawfully leviable, the authorities under the Act have got to decide it. If, in a given case, an assessee says that the particular transaction which is sought to be taxed in State 'A' has already been taxed in State 'B' nothing prevents him from impleading the State 'B' in proceedings in State 'A' and have the matter decided in the presence of all parties. It must be remembered that while acting under the Central Sales Tax Act, the State machinery acts as the machinery of the Central Govern- ment and not as the machinery of the State Government; in law, it is as if it belongs to Central Government. This view of ours gets reinforced if one keeps the provisions in section 8(2A) of the Central Sales Tax Act in view." In Cement Marketing Co. India (Private) Ltd. v. State of Mysore [1963] 14 STC 175 (SC), the goods were despatched from factories outside the State at buyer's risk from the time d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are sent which must be different from the State from which the goods move." In Oil and Natural Gas Commission v. State of Bihar [1976] 38 STC 435 (SC), it was observed: "............the delivery may be in Assam or in Bihar at Barauni but the movement of goods is the result of contract and as an incident to the agreement between the Commission and the Corpo- ration. The State of Assam has lawfully levied the Central sales tax on the petitioner." In the case of English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 (SC), it was observed that when a branch of a company forwards a buyer's order to the principal factory of the company and instructs them to despatch the goods direct to the buyer and the goods are sent to the buyer under those instructions it would not be a sale between the factory and its branch. If there is a conceivable link between the movement of the goods and the buyer's contract, and if in the course of inter-State movement the goods move only to reach the buyer in satisfaction of his contract of purchase and such a nexus is otherwise inexplicable, then the sale or purchase of the specific or ascertained goods ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate it cannot be considered to be an inter-State sale irrespective of the fact that C form was issued by the purchaser.-Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax [1981] 48 STC 351 (Delhi). In Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301 (SC), it was observed that the manufacture of goods at the Hyderabad factory and their movement thereafter from Hyderabad to branch office outside the State was an incident of the contract entered into with the buyer, for it was intended that the same goods should be delivered by the branch office to the buyer. There was no break in the movement of goods. Auction sale of diamonds was effected at Madras by National Mineral Development Corporation to buyers from Bombay. Successful bidders were to pay security deposit of 25 per cent of price-Delivery was at Bombay and payments settled at Bombay and sale invoice and delivery challan handed over at Bombay. It was held that movement of goods occasioned by sale although property in goods passed earlier on fall of hammer. Sales were held not liable to tax under Tamil Nadu General Sales Tax Act. Sales are inter-State sales and taxable under C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axes [1970] 26 STC 354 (SC), the assessee manufacturing trucks and buses in Jamshedpur in the State of Bihar, transferred the vehicles to stock-yards in other States. Dealers were required to mail to the company on the 15th of each month a firm order for purchases to be effected during the next succeeding month and their estimated requirement for two months following the next succeeding month. Stock available in stock-yards was then distributed to the dealers for which allocation letters were issued each month by sales office. The transactions was considered to be not inter-State sales. There were many instances where the vehicles had been actually delivered from the stock-yards prior to the issue of the allocation letter. It was held that the procedure followed by the assessee together with proved absence of any firm orders, indicated that the allocation letters and statements furnished by the dealers did not themselves bring about transaction of sale within the meaning of section 2(g) of the Act. The completion of the sales to the dealers did not take place at the works at Jamshedpur, appropriation of the vehicles was done at the stock-yards and it was open to the appellant til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of stocks from Madras to Calcutta. The transactions were not inter-State sales liable to tax under the Central Sales Tax Act. The movement of goods from one State to another without any of the elements of "sale" within the meaning of the Central Sales Tax Act cannot be subject to tax. The shipment was of stocks of cement belonging to the State Trading Corporation from one place to another. There was shortage of supply of cement at Calcutta. The State Trading Corpo- ration moved stocks from Madras to Calcutta. The area of need and the availability of stocks of cement were known to the State Trading Corporation. The transactions could not be subjected to Central sales tax. Punjab and Haryana High Court in the case of South Punjab Electricity Corporation Ltd. v. State of Haryana [1976] 37 STC 35, held that movement of goods from factory at Rohtak to Delhi branch was not as a result of sale as the goods were not appropriate till they reached Delhi branch. In Deputy Commissioner (Commercial Taxes), Tiruchirappalli v. Pudukkottai Textiles Limited [1976] 37 STC 544 (Mad.), it was held that since there was no evidence to show that the goods, in order to fulfil the contract should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchaser the contract was not concluded. Hence movement of goods from one State to another was on account of branch transfer only. In Kerala Small Industries Development Corporation Ltd. v. Com- mercial Tax Officer, Second Circle, Mangalore [1991] 83 STC 356 (Kar), it was held that supply of cement from Mangalore to cus- tomers in Kerala did not move as a result of covenant in contract. Transfer of goods were held to be mere transport of goods. In State of Andhra Pradesh v. Thungabhadra Industries Ltd. [1992] 86 STC 235, Andhra Pradesh High Court held that the appro- priation of goods against a particular contract takes place only at the depot, when the invoice is raised after receipt of the payment as the goods moved from factory in one State and depot in other State in truck loads at frequent intervals and the goods were unloaded in the depot and entered into stock register. In State of Tamil Nadu v. Mount Mechanical Works Pvt. Ltd. [1992] 87 STC 260, the Madras High Court held that, (1) The contract between the buyer and the branch in Bangalore did not contemplate any movement of goods from Tamil Nadu to Karnataka. (2) Goods were not directly delivered to the purchasers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the goods have moved from one State to another by the buyer after taking delivery from the seller in the State, then it could not be considered to be an inter-State sale. (3) The goods may be sent to the branch or agent for sale. If such despatch of goods is without reference to any contract, then the transaction cannot be considered to be an inter-State sale. (4) If the branch manager or agent has the discretion to give particular quantity it cannot be said that there is a link between movement of goods and sale. (5) In a particular State there may be one or two buyers who are purchasing goods from the branch, so long as the discretion remains to give a particular quantity, the transaction would not be considered to be an inter-State sale. (6) If the goods are sent to the agent for sale then it cannot be considered to be an inter-State sale. In such a situation it has to be seen that it should not be a camouflage of account. If the sale proceeds are the same for which the hundi has been drawn in advance, the assessing authority is justified in considering that an agreement was already entered into on the basis of which the sale has been effected as in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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