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TMI Blog2008 (1) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner in the present case is Associated Cement Companies Ltd., previously known as M/s. IDCOL Cement Ltd. (hereinafter referred to as, the company ). It is engaged in the business of manufacturing and sale of cement. The company has its factory in the district of Bargarh in the State of Orissa. The petitioner has a branch office at Kolkata in the State of West Bengal. Besides, the branch office, the petitioner also maintains nine godowns/dumps in West Bengal. The petitioner is registered under the Orissa Sales Tax Act, 1947 (hereinafter referred to as, the OST Act ) and Central Sales Tax Act, 1956 (hereinafter referred to as, the CST Act ) in the State of Orissa. In West Bengal, the company is also registered both under the local Sales Tax Act and CST Act. For the purpose of its business, the company appoints stockists in the State of West Bengal. For appointment of stockists, the company has circulated printed form and the persons intending to be appointed as stockists are required to fill up and submit the said printed form to the branch office of the petitioner in West Bengal. In the said format/application form the persons intending to become stockists are require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stockists in West Bengal in view of information furnished in clauses 21 and 22 of the application form and that the entire stock of cement was sold by the branch office at Kolkata only to its stockists. The assessing officer further held that 1,939 MT of cement dispatched by the head office on March 17, 1994 and March 18, 1994 and received in West Bengal on March 31, 1994 were sold on the same day to one distributor. Being aggrieved by the assessment order passed by the assessing officer, the petitioner filed appeal before the Assistant Commissioner of Sales Tax, Sambalpur, who relying upon clauses 21 and 22 of the application form circulated by company for appointment of stockists, came to a conclusion that privity of contract for sale of cement existed between the company and the stockists and accordingly dismissed the first appeal. Against the first appellate order, the petitioner preferred second appeal before the Orissa Sales Tax Tribunal, Cuttack (hereinafter referred to as, the Tribunal ) in S.A. No. 124 (C)/95-96. The appeal was heard by a Full Bench of the Orissa Sales Tax Tribunal and by order dated February 20, 1997 the learned Tribunal disposed of the said appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low held that pursuant to said information cements were moved from Orissa and sold to stockists without establishing any inseparable link between dispatch of cement from Orissa and sale of cement to the stockists in West Bengal. The learned counsel appearing on behalf of the Revenue has relied on a decision of the Supreme Court in the case of Sahney Steel and Press Works Ltd. v. Commercial Tax Officer reported in [1985] 60 STC 301, in support of his contention that the transfer/dispatch of cement of the company from its factory at Bargarh to its branch office at Kolkata is an inter-State sale. The learned counsel for the Revenue also cited a judgment of the honourable Supreme Court in the case of Balabhagas Hulaschand v. State of Orissa reported in [1976] 37 STC 207. Assailing the above contention of the Revenue, learned counsel for the petitioner argued that the facts of the case in Sahney Steel and Press Works Ltd. [1985] 60 STC 301 are completely different from the case of the petitioner and that the principle decided by the honourable Supreme Court in the case of Balabhagas Hulaschand [1976] 37 STC 207 supports the case of the petitioner. Concluding his argument, learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes place by transfer of document or title during the movement of goods from one State to another [See Hakim Syed Abid Hussain and Sons v. Government of Madras [1968] 21 STC 350 (Mad)]. Thus this section lays down the principle for determining as to when sale or purchase shall be deemed to take place in course of inter-State trade or commerce. Under section 3(a) the following two conditions must be fulfilled: (a) There must be a sale of goods. The word 'sale' has been defined under section 2(g) of the CST Act. The essentials of sale are: (i) parties must be competent to contract (ii) mutual assent, (iii) transfer of property in the goods from the seller to the buyer, and (iv) a price money paid or promised. If these conditions are fulfilled, then a completed sale takes place. (b) Such completed sale should occasion the movement of goods from one State to another. Section 6A of the Central Sales Tax Act which is also relevant reads as follows: 6A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale. (1) Where any dealer claims that he is not liable to pay tax under the Act, in respect of any goods, on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory at Bargarh to its branch office in the State of West Bengal otherwise than by way of sale. The movement of goods from the State of Orissa to the State of West Bengal was not occasioned under any contract of sale. There was no inseparable link between the dispatch of goods from Orissa to branch office in West Bengal and again from branch office to stockists and any contract of sale. According to the learned counsel for the petitioner, there was no separate agreement between the stockists and the company under which 74,829.2 MT of cement valued at Rs. l4,21,40,127 were dispatched from its factory to the stockist. He further submitted that in regular course and in the continuous process, the petitioner transfers/dispatches cement in railway racks to its branch at Kolkata under self-railway receipts. The branch offices of the petitioner at Kolkata endorse the railway receipts in favour of clearing and forwarding agents appointed by the petitioner. The clearing and forwarding agents after taking delivery of the cement carry the same to different dumps taken under rent by the branch office of the petitioner where the cements were stored. Thereafter only the stockists appointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arable link has been established by the Revenue between the dispatch of cement by the petitioner from its factory at Bargarh to its branch office at Kolkata and again sale of cement from the branch office to the stockist, Chowdhury Trading Company. The Revenue also failed to establish that 74,829.2 MT of cement valued at Rs. 14,21,40,127 were dispatched/transferred from the factory at Bargarh in the State of Orissa to the petitioner's branch office at Kolkata pursuant to any purchase order placed by the stockist with the head office or branch office of the petitioner and in compliance with such purchase order, above quantity of cement moved from Orissa. The contention of the petitioner before the Tribunal that stock of cement never moved to West Bengal as a result of information furnished by the stockist was not accepted by the Tribunal on the ground that the goods were dispatched from the State of Orissa to West Bengal and ultimately delivered to the pre-identified stockist. With the above observation, the Tribunal came to the conclusion that the forums below were justified in holding such transaction to be in course of inter-State trade and commerce subject to levy of tax und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods from Orissa to West Bengal before holding that the said transaction of dispatch was in the nature of inter-State trade. Reference has been made to the judgment of the honourable Supreme Court in Kelvinator of India Ltd. v. State of Haryana [1973] 32 STC 629. Relevant portion of the said judgment is extracted hereunder (at page 638): . . . the movement of goods from one State to another must be under the contract of sale. A movement of goods which takes place independently of a contract of sale would not fall within the ambit of the above clause. Perusal of section 3(a) further makes it manifest that there must be a contract of sale preceding the movement of the goods from one State to another, and the movement of goods should have been caused by and be the result of that contract of sale . . . In the aforesaid case, Kelvinator of India Ltd. entered into three separate distributorship agreements with three companies for sale of refrigerators manufactured by it. The refrigerators manufactured by the M/s. Kelvinator of India Ltd., moved from Faridabad to Delhi which were received at Delhi by the registered office of M/s. Kelvinator of India Ltd., and thereafter th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Ultimately, a concluded sale takes place in the State where the goods were sent; (iv) That State is different from the State from which goods moved. The principle enumerated by the Supreme Court in the aforesaid decisions supports the case of the petitioner. The learned counsel for the Revenue also relied on a decision of the Supreme Court in Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301, justifying its stand that the transfer/dispatch of cement by the petitioner from its factory at Bargarh to its branch office at Kolkata is an inter-State sale. The aforesaid judgment is distinguishable on the facts and not applicable to the case of the petitioner. In Sahney Steel and Press Works Ltd. [1985] 60 STC 301 (SC), the company was engaged in manufacturing of both standard and non-standard goods, and the honourable Supreme Court on considering the fact that the purchaser placed orders with specifications has observed at page 307 in the following manner: It is not clear from this illustration whether the goods were particular and specific goods earmarked for delivery to the buyer when they commenced their movement from State X. Apparentl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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