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TMI Blog2014 (5) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... - Considering the above said facts, it is crystal clear that the transactions in question satisfies the requirement under Section 3 of CST Act as to when interstate sale deems to occur - Given the fact that the movement of goods was pursuant to the contract of sale, the fact that the insurance coverage was borne by the assessee/supplier, per se, could not stand in the way of the clear cut facts existing in this case, pointing out that the sale could be nothing but an inter-state sale - In the circumstances, these Revisions are rejected. Relying upon Tvl.Gannon Dunkerly and Co. and Others Vs. State of Rajasthan and Others [1992 (11) TMI 254 - SUPREME COURT OF INDIA] - Even works contract assessable under the Local Act is subject to Sections 3, 4 and 5 of CST Act – Going by the definitions of inter-state sale and when a sale or purchase said to take place inside the State u/s 4 of CST Act, which is subject to Section 3 CST Act, there is no hesitation in holding that the transaction cannot be assessed under the provisions of the Local Act - Explanation 3(a) to Section 2 of TNGST Act, which is no different from Section 4 of CST Act, thus clearly goes against the contention of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment. It is seen from the facts stated herein that the assessee had a contract with Neyveli Lignite Corporation for design, manufacture, assembly inspection, shop testing, providing comprehensive insurance, loading at work, supply, delivery at site, unloading at site, receipt, storage, handling and preservation at site, erection including complete civil works, commissioning and performance testing at site of the complete Hydroslucing Ash handling system with all accessories, instruments and controls for Second Thermal Power Station Stage II Expansion. The total cost of the contract was ₹ 12,49,76,000/-. A perusal of Letter of Intent placed before this Court by the learned Additional Advocate General shows that Annexure I gives the break up of the schedule of price on design, engineering, manufacture, shop testing supply ex-works. The contract also gives separate cost towards erection, testing and commissioning; complete civil work and other items were for fixed lumpsum. It is further that the contract was entered into between Neyveli Lignite Corporation, Neyveli, Tamil Nadu with the assessee's branch office at Calcutta. Evidently, the contract contemplated movement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same were taken delivery of by the Neyveli Lignite Corporation; the ownership of the goods thus passed on to Neyveli Lignite Corporation. Payment of 90% of the price till the stage of delivery and verification of the materials received and postponement of 10% till successful completion of performance test at site had nothing to do with the transfer of property in goods. In any event, non- payment of full consideration did not have the effect of postponing the transfer of property. The assessee further pointed out that when the contract itself was with the Head Office at Mumbai, the terms of the contract contemplating movement of goods from outside the State and the assessee being the branch of the company had nothing to do with the contract and hence the State of Tamil Nadu had no authority to tax the inter state transaction emanating from Mumbai and Calcutta. Referring to the decisions reported in 52 STC 164 (Cheseborough Pond's Inc V. State of Tamil Nadu) and 60 STC 301 (S.C.) (Sahney Steel and press Works Ltd. V. CTO), the assessee pointed out that the goods transferred direct to the Neyveli Lignite Corporation, could not be taxed as a local sale. 6. The assessee furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plier the owner of the goods till the commissioning was completed. Further, the insurance coverage, cannot in any manner, speak on the nature of the contract. In any event, assessee, not being a party to the agreement, the question of making the assessee liable to be assessed of the transaction under the provisions of the Tamil Nadu General Sales Tax Act did not arise. On facts, the Tribunal came to the conclusion that the contract was a case of inter state sale and not assessable under the provisions of the Tamil Nadu General Sales Tax Act. Hence, the assessment was set aside. Aggrieved by this, the Revenue has preferred the present Tax Case (Revisions). 10. Learned Additional Advocate General appearing for the petitioner/Revenue strenuously contended that having regard to the fact that the ultimate responsibility of erection was with the assessee, applying the principle of accretion, the transfer has to be treated as taking place only in Tamil Nadu attracting the provisions of Tamil Nadu General Sales Tax Act. Pointing out to the insurance coverage and the handling by the assessee herein, learned Additional Advocate General pointed out that even applying the decisions reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in question satisfies the requirement under Section 3 of the Central Sales Tax Act as to when interstate sale deems to occur. It must be pointed out herein that except for propounding the accretion theory, the State has not placed any materials before this Court to disturb the findings of fact by the Tribunal as to the character of movement as an interstate sale. 14. Learned Additional Advocate General appearing for the Revenue placed heavy reliance on the decision reported in 102 STC 373 (Bharat Heavy Electricals Limited v. Union of India and others) particularly, to Part III at page 390. We do not find the judgment in Part III would be of any assistance to the Revenue, since even on facts therein, the State itself had conceded the proposition that the movement of machineries from Andhra Pradesh to Tamil Nadu - BHEL was by way of branch transfer and in respect of movement from Andhra Pradesh to Orissa and West Bengal was an interstate sale. The Apex Court pointed out that the movement of machineries from Andhra Pradesh to Tamil Nadu as a branch transfer was accepted by the State of Andhra Pradesh and no issues were raised thereon. The question that arose for consideration b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Head Office at Mumbai. Thus, given the fact that the movement of goods from Mumbai to Tamil Nadu was pursuant to the contract of sale, the fact that the insurance coverage was borne by the assessee/supplier, per se, could not stand in the way of the clear cut facts existing in this case, pointing out that the sale could be nothing but an inter state sale. In the circumstances, we have no hesitation in rejecting these Tax Case Revisions. 19. It may be of relevance to point out that in the decision reported in 88 STC 204 (Tvl.Gannon Dunkerly and Co. and Others Vs. State of Rajasthan and Others), the Apex Court pointed out that even works contract assessable under the Local Act is subject to Sections 3, 4 and 5 of the Central Sales Tax Act. Going by the definitions of inter state sale and when a sale or purchase said to take place inside the State under Section 4 of the Central Sales Tax Act, which is subject to Section 3 of the Central Sales Tax Act, we have no hesitation in holding that the transaction cannot be assessed under the provisions of the Local Act, viz., Tamil Nadu General Sales Tax Act. Explanation 3(a) to Section 2 of the Tamil Nadu General Sales Tax Act, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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