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TMI Blog2015 (3) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... ith effect from 21.02.1989. The assessee is engaged in the manufacture of `Beedi' and has its factory and head office at Sholapur in the State of Maharashtra. It operates in the State of Andhra Pradesh through its registered branch office at Sirsilla Road, Kamareddy town, Nizamabad District, Andhra Pradesh. 3. The assessee is the branch office of the respondent-Company. The assessee had purchased `Beedi' leaves, for Rs. 1,07,51,740/- and Rs. 1,01,35,636/- for the assessment years 1989-1990 and 1992-1993 respectively, by participating in the auction conducted by the Forest Department, Government of Andhra Pradesh (for short, "the seller"). After the purchase, the assessee had dispatched the said `Beedi' leaves to the head office in the State of Maharashtra. Subsequently, the branch office of the respondent-Company claimed an exemption on its gross and net turnover of Rs. 1,07,51,740/- and Rs. 1,01,35,636/- for the said assessment years on the ground that the aforesaid transaction is in the nature of inter-State sale and therefore, is not exigible to tax under Entry 18, Second Schedule of the Act. 4. The Commercial Taxes Officer, Kamareddy (for short, "the CTO"), by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions effected by the assessee are not agency transactions on behalf of the non-resident principal. Further, it has observed that since the delivery took place in the State of Andhra Pradesh at the godowns of the seller and it is only thereafter that the goods were transferred at the instance and application of the assessee specifying the mode of transport, route of transport and the destination to which the goods have to be transported, it could be deduced that the transaction took place in the State of Andhra Pradesh between the seller and the assessee. Therefore, the Revisional Authority has come to the conclusion that the transaction is liable to tax under the Act and set aside the order of the First Appellate Authority and consequently, restored the order passed by the CTO, dated 23.02.1996. 8. Aggrieved by the order so passed, the Assessee had approached the High Court by way of Special Appeal No.27 of 1996. The High Court has observed that the goods in the present case were purchased for the purpose of transport to the head office of the respondent-Company situated in the State of Maharashtra, the same being implicit in the agreement of purchase itself that the goods ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Andhra Pradesh under the provisions of the Act. 15. At the outset, we would discuss the decision of this Court in K.B. Saha's case relied upon by learned counsel for the respondent-assessee to fortify his stand. In our view, this decision does not apply to the facts and circumstances of the present case. The facts in the instant case are materially distinguishable from the facts in the aforesaid case. Therein, the assessee carried on business in tobacco and Kendu leaves and had its registered office in the State of West Bengal, that is, outside the State of Orissa where the buyer is situated and the auction was conducted. The purchaser was neither situated in the State of Orissa nor registered as a dealer under the West Bengal Sales Tax, 1994. Since the place of business of all entities of the assessee were located outside the State of Orissa, the Court considering the same held that the sale was inextricably connected to the transportation of the goods outside the borders of the State of Orissa so as to render the sale transaction complete and therefore, was an inter-State sale. In the instant case, the assessee-branch office situated in the State of Andhra Pradesh is a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981), 1981 3 SCC 457, this Court observed that it is only 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, it must be held to be an inter-State sale. 19. On consideration of the principles enunciated in the aforesaid decisions of this Court, it becomes abundantly clear that in order to constitute an inter-State sale, the movement of goods should be occasioned by the sale and the movement of goods and the sale must be inextricably connected. 20. In view of the above, it would be beneficial for us to notice the decisions wherein this Court has laid down the principles pertaining to inter-State sale. The Constitution Bench of this Court in Cement Marketing Co. of India (P) Ltd. v. State of Mysore, (1963) 3 SCR 777, inter alia, noticed the that in order for a sale or purchase to be considered as `Inter-State' it would be essential that there must be transport of goods from one State to another under the said contract of sale or purchase. The Constitution Bench, vide a detailed judgment, in support of the aforesaid principle of law, observed as follows: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given branch office then communicated the terms and specifications of the orders to the registered office of the assessee, situate at Hyderabad, and for the purpose of fulfilling that order the manufactured goods commenced their journey from the registered office within the State of Andhra Pradesh to the branch office outside the State for delivery of the goods to the buyer. The assessee therein contended that when the registered office has dispatched the manufactured goods to its branch office, it ought to be considered merely as a transfer of stock from the registered office to the branch office. This Court relied upon its earlier decision in the case of English Electric Company of India Ltd. v. Deputy Commercial Tax Officer, (1976) 4 SCC 460, to observe that when the movement of the goods from one State to another is an incident of a given contract it is an inter-State sale, and what would be decisive is whether the given contract of sale is one which occasions the movement of goods from one State to another. 23. This Court, in Sahney Steel and Press Works Ltd. case (supra), held as follows: "8. ...The manufacture of the goods at the Hyderabad factory and their movement ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue that arose for the consideration of this Court was whether the sale or purchase of goods therein could be said to have taken place in the course of inter-State trade or commerce and therefore whether the said transaction was exigible to tax under the CST Act. The said case pertained to a Company which had its registered office in New Delhi and further was incorporated in the State of Andhra Pradesh as well. It would be pertinent to note that the Company therein was registered as a dealer under the Act as well as the CST Act. In determining the question whether the transaction therein was an inter-state sale or a `branch-transfer', this Court referred to Sections 3(a) and 6-A of the CST Act and held as under: "23. It is an accepted position in law that a mere transfer of goods from a head office to a branch office or an inter-branch transfer of goods, which are broadly brought under the phrase "branch transfers" cannot be regarded as sales in the course of inter-State trade, for the simple reason that a head office or branch cannot be treated as having traded with itself or sold articles to itself by means of these stock transfers." 27. In view of the aforesaid settled p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he delivery of the goods is complete at the godown of the seller on payment of the amount of the agreed consideration. 31. In the instant case, the sale of the goods is between the seller and the purchaser, that is between the State Department and the assessee-branch office in the State of Andhra Pradesh. 32. Taking into consideration the abovementioned factors it becomes clear that the delivery of the goods takes place at the godown of the seller in the State of Andhra Pradesh. The movement of goods from the godown takes place at the instance of the purchaser. The final destination of the consignment and the route or destination of the goods by the seller is inconsequential to the sale transaction. 33. In view of the above discussion, it can be inferred that the events of sale of goods by the seller and the movement of goods from the State of Andhra Pradesh to another State are not inextricably connected and independent of each other. There is no incident of direct sale between the seller and the head office of the respondent-Company in the State of Maharashtra. It is the branch office that purchases the goods and receives them subsequent to payment made by it to the seller and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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