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TMI Blog2006 (4) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... undertakings such as the Coal India Ltd. (hereinafter referred to as, "CIL"), National Mineral Development Corporation, Hindustan Zinc Ltd., etc., and supplies to these undertakings constitute almost 90 per cent of its total production. CIL placed orders on IDL, Rourkela, for supply of explosive, detonators, accessories, etc., to its collieries inside and outside the State of Orissa with a stipulation that delivery shall be made against the indent placed by the collieries. IDL has its consignment agents at different places outside the State. During the above noted years, IDL effected supplies through its consignment agents against indents placed by the collieries and for this purpose it claimed to have dispatched the goods to its consignment agents on stock transfer basis otherwise than by way of sale. It is the claim of IDL that dispatches from its factory at Rourkela were stock transfers and are not liable to be assessed to tax under the C. S. T. Act as the sales took place when the supplies to the collieries were made against the indents placed by them. The State, on the other hand, claimed that the supplies were made on account of order placed by CIL and the movement of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated April 27, 1987 with the finding that there is conceivable link of dispatch of goods by the IDL to the consignment agents in pursuance of the contract and the consignment agents simply functioned as custodian of materials for storage before those were delivered to the customers. It was concluded by the Tribunal that the taxability of such goods can arise only when the goods are actually delivered to the buyers. It directed to take into consideration only such transactions where the goods were actually supplied on receipt of requisition from the collieries under the contracts of sale entered into between CIL and the IDL and accordingly remanded the assessments to the S. T. O. for completion of reassessment in the light of observation made in the order. Second Appeal No. 91(c) of 1986-87 relating to the year 1983-84 was disposed of by order dated August 13, 1987 in the light of the order dated April 27, 1987 for the years 1977-78 to 1982-83. During the assessment for the year 1990-91 the assessing officer found that IDL failed to produce the declaration in form C for Rs. 85,66,544.96 in support of concessional rate of tax. The copies of agreement, bills of lading towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al after consideration of minutes of discussions, terms of the contract, etc. The Sales Tax Tribunal in the order passed on May 15, 1992 under section 24(5) of the O. S. T. Act modified the second appeal orders dated April 27, 1987 and August 13, 1987 in terms of the order dated February 11, 1992 of this court. The reassessments for the years 1977-78 to 1983-84 following the abovesaid order of remand were completed treating the transactions as inter-State sales and the said assessments were confirmed in first appeal order dated January 16/18, 1990. IDL filed second appeals being S. A. Nos. 105(c) to 111(c) of 1989-90 before the Tribunal. But these appeals were dismissed in view of the order dated February 11, 1992 of this Court disposing of the reference against orders dated April 27, 1987 and August 13, 1987. Subsequent to the order of remand dated February 11, 1992 of this Court and the order dated February 25, 1992 passed by the Tribunal, the assessing officer completed the reassessment for the years 1977-78 to 1983-84 holding the transaction to be inter-State sales and disallowing, inter alia, the claims of deduction on account of freight charges. The first appeal filed by ID ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o hold that it was not the contract of sale but the actual purchase and sale was triggered only when a colliery placed indents with M/s. I. D. L. Chemicals? (2) That in view of the fact that M/s. I. D. L. Chemicals moved goods in pursuance to the supply order placed by M/s. C. I. L. to outside the State for the purpose of eventual delivery to the constituents of M/s. C. I. L., whether the Sales Tax Tribunal was correct in law to hold that the transactions do not constitute sale falling under section 3(a) of the C. S. T. Act? (3) That in view of the fact that the indents placed by the constituents of M/s. C. I. L. was mere indents to take delivery of the goods, whether the Sales Tax Tribunal was correct to hold that the actual sales were triggered by such indents and taken place inside the respective State and were intra-State sale subject to levy of tax under the law of that State?" Mr. Ashok Mohanty, learned Senior Standing Counsel, Sales Tax Department, argued that the terms of the quotation offered by M/s. IDL the assessee-company, and the supply order placed by M/s. CIL clearly reveal that the transaction was out and out a contract for sale, and the purchase took place wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer, and the said finding not having been upset by the apex Court, the issue has reached its finality, and this court is now estopped from reopening the same and recording a fresh finding on the issue. The principle of inter-State sale is now well-settled through numerous judicial pronouncements. In the cases of Commissioner of Sales Tax, U.P., Lucknow v. Suresh Chand Jain [1988] 70 STC 45 (SC) and Bengal Immunity Company Limited v. State of Bihar [1955] 6 STC 446 (SC), it has been held that sale could be said to be in the course of inter-State trade only if two conditions concurred, namely, (1) sale of goods and (2) a transport of these goods from one State to another. In the case of Manganese Ore (India) Ltd. v. Regional Assistant Commissioner of Sales Tax, Jabalpur [1976] 37 STC 489 (SC), following the ratio of the case of Mod. Serajuddin v. State of Orissa [1975] 36 STC 136 (SC), the following observation was made to clarify the scope and ambit of inter-State sale. "(iii) that the following conditions must be satisfied before a sale can be said to take place in the course of inter-State trade or commerce: (1) There is an agreement to sell which contains a stipulation expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers. On the goods reaching the branches, they were inspected by the customers and accepted by them where the customers were local parties. Where the customers were outside the State, the branch despatched the goods to them. The branches raised the bills and received the sale price. They also furnished form F to the registered office in Hyderabad under section 6-A of the Central Sales Tax Act, 1956 in the case of stock transfers to the branches. The petitioner-company was assessed to State sales tax in Maharashtra, West Bengal and Tamil Nadu in respect of those goods. The company claimed that there was only a transfer of stock from Hyderabad to the branches outside the State of A.P. and that the sales effected to the customers by the branches were local sales in the respective States. The Commercial Tax Officer, Hyderabad, held the sales to be sales in the course of inter-State trade and made an assessment accordingly for the year 1979-80 and also issued notices for reopening the assessments for the two earlier years 1977-78 and 1978-79 to include such sales. The petitioner-company filed a writ petition in the Supreme Court claiming that the sales were not sales in the course of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. IDL and its agents were not debarred from diverting those goods to other customers. Mr. Mohanty, learned Standing Counsel, Sales Tax, counter argued that specific direction for supply being there in the purchase order and specific quantities of each item and the rates thereof having been specified and goods having been sent from M/s. IDL, Rourkela, to the respective consignment agents to comply with such purchase order, there was a conceivable link between the contract of sale and the movement of goods from one State to another and so the sale was complete at the exit point of M/s. IDL, Rourkela. To support his submission, Mr. Mohanty, specifically relied on the ratio laid down in the case of South India Viscose Ltd. v. State of Tamil Nadu [1981] 48 STC 232 (SC), wherein the following observation finds place: "If there is a conceivable link between a contract of sale and the movement of goods from one State 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 will not alter the inter-State character of the sale." The purchase order was issued by M/s. CIL in respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the M/s. CIL reveals that M/s. CIL was directed not to store explosives at the mines but make indents as required. May be for this reason, the respective collieries were asked to place indent and take delivery of the explosive from the magazines of nearest agents of M/s. IDL from time to time as per their requirement. There is also existence of record to show that on one occasion some of the explosives in containers dispatched by M/s. IDL were damaged during transit due to rain and compensation was claimed by M/s. CIL from the railways. The report of the surveyor is available in this regard. All these materials tend to show that the goods despatched from M/s. IDL, Rourkela unit were meant for M/s. CIL from the very moment of dispatch from M/s. IDL, Rourkela. If that would not have been so, M/s. CIL would not have paid the freight charges, transit insurance and would not have claimed compensation for the goods damaged during transit and would not have issued the cheques against the invoices in favour of M/s. IDL. The next, terms and conditions of the purchase order and the above noted circumstances are good enough to establish that there was a conceivable link between the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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