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TMI Blog2015 (12) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal can be disposed of where the issue is a matter of law or fact, whereas an application for certiorari is limited to cases where the issue is a matter of law appearing on the face of the order ie where the decision is liable to be upset as it is made without jurisdiction or in consequence of an error of law. If the tribunal has erroneously refused to admit admissible and material evidence, or has erroneously admitted inadmissible evidence, or if a finding of fact is based on no evidence, it would be an error of law which can be corrected by a writ of certiorari. Where the conclusion of law by the tribunal is based on an obvious mis-interpretation of the relevant statutory provisions, or in ignorance of it or even in disregard of it or is expressly founded on reasons which are wrong in law, the said conclusion can be corrected by a writ of certiorari. Whether or not an error is an error of law, and an error of law which is apparent on the face of the record, must always depend upon the facts and circumstances of each case, and upon the nature and scope of the legal provisions which is alleged to have been misconstrued or contravened. - As larger issues regarding the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of turn-key projects. As they were entrusted with the work of erection and installation, the petitioners contractors have also been entrusted with the task of procuring material therefor. The functions relating to the supply of material, and rendering services of erection and installation, are integrally connected and are interdependent. A consolidated price is stipulated as the total contract price combining the contract prices of the individual agreements. It is evident that, while the form of the contracts indicate that they are two separate contracts, in substance they are one single indivisible works contract for supply of material and for erection and installation of equipment. Existence of a bailment clause or a free issues clause does not alter the situation. - L and T has admitted in its Writ Petition that the contract between the petitioner and owner is an indivisible works contract; the averments in the Writ Affidavit cannot be treated as an inadvertent or a typographical error; the statement made by the petitioner is an admission; and admission in pleadings stand on a higher pedestal than evidentiary admissions. As we have held that the subject contracts are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into either before commencement of movement in the first State, or after completion of movement of the goods in the second State, can neither be a Section 3(b) sale nor a subsequent sale exempt under Section 6(2) of the CST Act. Sale of unascertained goods can also take place after its delivery in the other State when the contract requires the buyer to ascertain and, thereafter, to buy the goods. When the movement of the goods starts, pursuant to a sale, they shed the character of either unascertained goods or future goods. Sale of goods, by transfer of documents of title during its movement from one State to another, can only be the sale of specific or ascertained goods (Balabhagas Hulaschand v. State of Orissa (1975 (12) TMI 136 - SUPREME COURT OF INDIA). It is only a contract of sale of specific goods which can be effected by transfer of documents of title during its movement, and not a sale of future goods. - As the subject contracts provide for sale of future goods, they could not have been, and were not, entered into when the goods were in movement from one State to another. A contract for the sale of future goods can neither be a Section 3(b) sale nor a subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one in such cases, to ensure free and unrestricted movement of goods from one State to another. It is not for the revenue to suggest how the parties should frame the terms of their contract. All that the assessing and revisional authorities are required to examine is whether the subject transactions, on a reading of the contract as a whole, fall within the ambit of either Section 3(a) or Section 3(b) of the CST Act. It is not open to them to consider whether, instead of an inter-state sale, the goods could have been transferred by the petitioner contractor to themselves within the state, and then sold the goods to the owner only to enable the revenue to levy tax on such sales as intra-state sales. Likewise there is no obligation cast on the supplier, either under the CST Act or under the contract, to make a branch transfer, and then sell the goods to the contractor. Questions, as to how a contract should be structured, and whether the goods should be sold in the course of inter-state trade or commerce or brought within the state as branch transfers, are commercial decisions, for the contracting parties to take, and not for the assessing/revisional authorities to impose. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re filed W.P. No.19516 of 2009. All the petitioners have executed turnkey projects for different customers. They claimed that the goods supplied by them, for being used in the turnkey projects, were subsequent sales exempt from tax under Section 6(2) of the CST Act, import sales under Section 5(2) of the CST Act, and the respondents lacked jurisdiction to subject these transactions to tax under the AP VAT Act treating them as intra-state sales. On their claim being negatived by the assessing/revisional authorities they have invoked the certiorari jurisdiction of this Court. It would suffice to note the contents of the assessment order passed in W.P. No.8006 of 2009 as illustrative of the orders impugned in these Writ Petitions. The petitioner in W.P. No.8006 of 2009, M/s. Larsen and Toubro Ltd, is a company registered under the Companies Act with its registered office at Mumbai. It has various branches, among others, at Hyderabad also. It is engaged in the execution of Engineering, Procurement and Construction (EPC) Works Contracts on a turnkey basis, and is a registered dealer both under the AP VAT Act and the CST Act. For the tax period 01.04.2005 to 31.03.2006, the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act and were exempt from levy of tax. In the impugned assessment order the assessing authority observed that, in the show-cause notice, he had opined that there were two independent transactions - one between the foreign seller in favour of the contractor, and the second set of transaction between the contractor and the contractee; the petitioner had refuted this contention contending that the goods had moved from outside the State specifically for the purpose of compliance of the supply contract and, therefore, the movement had an inextricable link with the ultimate sale; the petitioner had opposed the view that there cannot be a sale in transit in a works contract, placing reliance on Larsen and Toubro Limited v. Commissioner of Commercial Taxes (2003) 132 STC 272 (AP) (DB); and they had also placed reliance on MMTC of India Ltd. v. Sales Tax Officer (1998) 111 STC 434 = AIR 1999 SC 121 = (1998) 7 SCC 19 (SC)in respect of High Sea Sales falling under Section 5(2) of the CST Act. After extracting Sections 3(b) and 5(2) of the CST Act, the assessing authority held that these provisions refer to a 'sale'which is effected by transfer of documents of title while the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to execute a work, where the transfer of property takes place not as chattel qua chattel, but on the theory of accretion; in such a case, it is impermissible to split such contracts into a supply and labour contract; the nature of the contract was that of a works contract which the petitioner had conveniently split into two contracts - one of which was as a supply contract wherein they claimed exemption under Section 3(b) and Section 6(2) of the CST Act; the other contract was designed as a labour contract or a works contract as it related only to erection/installation etc., by deploying its labour, and no material was involved therein; the petitioner had claimed exemption on a portion of this also; thus by splitting the works contract, one into a supply contract and the other into a labour contract, the petitioner had claimed exemption on the entire value of the contract running into crores of rupees; tax planning could only be within the framework of law; after the 46th amendment to the Constitution of India, the States had been conferred the power to levy tax on works contract; even thereafter the concept of transfer of property in the goods, involved in the execution of a work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 3(b), 6(2) and 5(2) of the CST Act; the sale of goods, involved in a works contract, is concluded only after the said goods are incorporated/merged/fused with the property of the contractee; the petitioner had split the contract into supply of goods, and erection and installation, only to make it tailor made to suit Sections 3(b), 6(2) and 5(2) of the CST Act, and nothing else; the transactions must, therefore, be treated as intra-state deemed sale of goods involved in a works contract; MMTC of India Ltd. (1998) 111 STC 434 = AIR 1999 SC 121 = (1998) 7 SCC 19 (SC) was a case of normal sale, in the course of import, where the property was transferred chattel qua chattel; in the present case, the impugned transactions are transactions of works contract where such transfer of property takes place on the theory of accretion, i.e. after the goods get merged/fused with the property of the contractee; as property in the goods is transferred only after its installation and erection, such a deemed sale is complete only after such installation and the like; the ratio of the decision in MMTC of India Ltd. 2 has no application to the facts of the present case; and the reasoning of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. v. Union of India (1997) 5 SCC 536;Chhabil Dass Agarwal;G. Veerappa Pillai v. Raman and Raman Ltd. AIR 1952 SC 192;CCE v. Dunlop India Ltd. (1985) 1 SCC 260;Ramendra Kishore Biswas v. State of Tripura (1999) 1 SCC 472;Shivgonda Anna Patil v. State of Maharashtra (1999) 3 SCC 5;C.A. Abraham v. ITO[18]AIR 1961 SC 609;Titaghur Paper Mills Co. Ltd. ;Excise and Taxation Officer-cum- Assessing Authority v. Gopi Nath and Sons (1999) Supp (2) SCC 312;Whirlpool Corpn. v. Registrar of Trade Marks (1998) 8 SCC 1;Tin Plate Co. of India Ltd. v. State of Bihar-(1998) 8 SCC 272;Sheela Devi v. Jaspal Singh (1999) 1 SCC 209;Punjab National Bank v. O.C. Krishnan (2001) 6 SCC 569;Union of India v. Guwahati Carbon Ltd. (2012) 11 SCC 651;Munshi Ram v. Municipal Committee, Chheharta (1979) 3 SCC 83; andChhabil Dass Agarwal). Relying on Chhabil Dass Agarwa l6 ;State of U.P. v. Mohd. Nooh-AIR 1958 SC 86;Titaghur Paper Mills Co. Ltd. 5 ;Harbanslal Sahnia v. Indian Oil Corpn. Ltd. (2003) 2 SCC 107;State of H.P. v. Gujarat Ambuja Cement Ltd.-(2005) 6 SCC 499;Chhabil Dass Agarwal6;K.S. Rashid and Son v. Income Tax Investigation Commission AIR 1954 SC 207;Sangram Singh v. Election Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtained or future goods, are essentially questions of fact, more appropriately a mixed question of fact and law, and the factual aspects should have been asked to be dealt with by the authorities. The orders, under challenge in these Writ Petitions, are either assessment or revisional orders passed by the concerned authorities exercising jurisdiction under the AP VAT Act. This Court has been called upon, by Learned Counsel on either side, to mainly examine whether the impugned orders are without jurisdiction. The enquiry, in these Writ Petitions, is confined to an examination of the material placed before the assessing and the revisional authorities on the parameters applicable to certiorari proceedings. This Court is conscious, and need not be reminded, that the statutory system of appeals is more effective and more convenient than an application for certiorari as an appeal can be disposed of where the issue is a matter of law or fact, whereas an application for certiorari is limited to cases where the issue is a matter of law appearing on the face of the order ie where the decision is liable to be upset as it is made without jurisdiction or in consequence of an error of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment or in defiance of the fundamental principles of judicial procedure etc. (Chhabil Dass Agarwal 6 ). The existence of an alternative remedy is merely a factor to be considered, and would not impinge upon the jurisdiction of the High Court to deal with the matter itself if it is in a position to do so on the basis of the affidavits filed. (S.J.S. Business Enterprises (P) Ltd. v. State of Bihar (2004) 7 SCC 166). If the High Court has entertained a petition, despite availability of an alternative remedy, and has heard the parties on merits it would, ordinarily, not be justified in dismissing the Writ Petition on the ground of non-exhaustion of the statutory remedies unless it finds that factual disputes are involved, and it would not be desirable to deal with them in a writ petition. (L. Hirday Narain v. Income Tax Officer, Bareilly (1970) 2 SCC 355;Gujarat Ambuja Cement Ltd 28 ). These writ petitions were admitted several years ago, and elaborate submissions were put forth by Learned Counsel on either side not only on the effect of the contractual provisions, but also on the scope of Sections 3(a), 3(b), 4, 5(2), 6(2) and 9 of the CST Act. Despite reminding us of the limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial Tax Officer to prove that a turnover is liable to tax (Hyderabad Deccan Cigarette Factory v. State of A.P. (1966) 17 STC 624 (SC); and, as held in TELCO Ltd. v. Assistant Commissioner of Commercial Taxes (1970) 26 STC 354 (SC)), the assessing authority is bound to examine each individual transaction. The aforesaid objections, put forth on behalf of the petitioners, may well justify the impugned orders being set aside, and the matters being remanded to the concerned authorities to pass orders afresh on merits. While the petitioners have not availed the statutory remedy of appeal, the assessing/revisional authorities have also chosen to ignore or by-pass the judgments of the Division Bench of this Court (which is the jurisdictional High Court) and have, instead, placed reliance on judgments of other High Courts. As larger issues regarding the scope of certain provisions of the CST Act arise for consideration, we have examined all the issues raised both on behalf of the petitioners and the respondents, even though they may not have been dealt with in the impugned orders, as a quietus must be given to the oft recurring questions regarding the jurisdiction of the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the effort of the assessing authority, to call the contracts indivisible works contracts, though they are not, is of no consequence since an indivisible contract is also divisible by legal fiction. Sri K. Vivek Reddy, Learned Counsel for the respondent, would submit that the assessing/revisional authorities have held that, even though the petitioners had entered into supply and erection contracts, it constituted a composite contract i.e. an indivisible works contract; in arriving at this finding, they had reviewed the contracts, evidence, documents and the nature of the work done by the petitioners, in particular, on (a) the presence of a cross fall breach clause in the contracts in various manifestations; (b) the contractual clauses, and the description of the documents, itself show that the petitioner was executing one work; (c) the intention between the parties is only to execute the work with the material supplied by the contractor; (d) the rights of the dealer (supplier) over the property in the goods and the risk due to injury and loss to the goods, remains with the supplier till the commissioning of the turnkey project; (e) the assessee remains the owner of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - contractor to the owner, the owner then issues the very same material as free issues to the petitioner-contractor for being used in the erection and installation of the plant. The contention of the respondents, however, is that the contract is, in effect, an indivisible contract and, while they are styled as two contracts i.e., supply and erection contracts, they are, in fact, one composite indivisible contract. Prior to the 46th amendment to the Constitution, an indivisible contract would have disabled the revenue from subjecting the goods, which formed part of the turnkey project, to tax as a turnkey project is immovable property, and does not constitute goods (movable/chattel). It is because of the legal fiction, created by Article 366-29(A)(b), that an indivisible contract can be fictionally divided into two contracts, one for sale of the goods used in the erection and installation of the project, and the other for work and services; and to tax the deemed sale of goods involved in the execution of such a contract. In effect, the submission of the revenue is that these two contracts (supply contract and erection contract) should be treated as a single indivisible cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a single instrument embodying them. (State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd., 1959 SCR 379 = AIR 1958 SC 560 =1958-VIL-01-SC). In such cases the transaction would not be one and indivisible, but would fall into two separate agreements. (Hindustan Aeronautics Ltd. v. State of Karnataka (1984) 55 STC 314 (SC);State of Himachal Pradesh v. Associated Hotels of India Ltd., (1972) 29 STC 474 = AIR 1972 SC 1131) (five judges). If there are two independent contracts, namely, purchase of the components from a dealer, it would be a contract for sale and similarly, if a separate contract is entered into for installation, that would be a contract for labour and service. (Kone Elevator India (P) Ltd. v. State of T.N. (2014) 7 SCC 1 =2014-VIL-12-SC-CB). A composite contract, for supply and installation, should be treated as a works contract as it is not chattel sold as chattel or, for that matter, a chattel being attached to another chattel. (Kone Elevator India (P) Ltd. A 'works contract' is an entire and indivisible works contract for the construction/execution of a turnkey project to specifications where the person executing the work is entitled to receive t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive performance of the erection contract, the supply contracts, in substance, do not absolve the petitioners-contractors of their obligations of erection and installation of equipment after the goods are sold by them to the owner. The petitioners-contractors' obligations, under both the supply and erection contracts, cease only after the turn-key project becomes operational, and after final payment is made both for supply of material and for erection and installation of equipment. While a dual role is not impermissible in execution of turnkey projects, its relevance, in determining whether or not the subject contracts are indivisible works contracts, is insignificant. While we see no reason to burden this judgment with a reference to all the relevant clauses in each of the agreements, it is useful to note some of them. Payment under clause 4.2.2 of the Alstom - GVK and Alstom - Goutami supply contract is conditional on performance acceptance under the services contract. Clause 14.4 of the Alstom - GVK and the Alstom - Gautami Supply Contract stipulates that, if the services contract is terminated by the owner, the owner shall have the right to terminate the supply contract. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into between the parties, it was only one contract for the reason that NTPC kept a right with it with regard to the cross-fall breach clause, meaning thereby that default in one contract would tantamount to default in another, and the whole contract was liable to be cancelled. Existence of a cross-fall breach clause, or a clause which enables the owner to terminate the supply contract for breach of the erection contract and vice-versa, would mean that, while the contracts are ostensibly two separate contracts - one for supply of material and the other for rendering works and services, they are, in fact, one single indivisible contract. The goods supplied to the owner, under the supply contracts, are tailor made goods, and cannot be bought off the shelf. Such goods cannot, ordinarily, be sold to another except for its use in turnkey projects of a similar nature. The petitioners have been entrusted with the work mainly for their expertise in erection and installation of plants in the execution of turn-key projects. As they were entrusted with the work of erection and installation, the petitioners contractors have also been entrusted with the task of procuring material therefor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns Limited for a lumpsum amount. Clause 23.2 of the bidding document stipulates that the prices to be quoted are intended to provide for all works duly and properly completed in accordance with the General Conditions of Contract and Special Conditions of Contract, if any, and are required to include the cost of delivery of the equipment. Clause 23.2.2 stipulates that payment against supplies would be released only on receipt and acceptance of material as per payment terms referred to in the General Conditions. Article 8 of the Seimens - RINL agreement stipulates that, in consideration of the payment to be made by the customer (owner) to the contractor, the contractor covenants with the customer to design, manufacture and supply the plant and equipment as per the contract specification and other documents of the contract. A consolidated price is stipulated as the total contract price combining the contract prices of the individual agreements. It is evident that, while the form of the contracts indicate that they are two separate contracts, in substance they are one single indivisible works contract for supply of material and for erection and installation of equipment. Existence of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record, the error condoned, and the plea deleted. On the other hand, relying on Nagindas Ramdas v. Dalpatram Ichharam (1974) 1 SCC 342;Bishwanath Prasad v. Dwarka Prasad (1974) 1 SCC 78;Viswalakshmi Sasidharan v. Branch Manager, Syndicate Bank (1997) 10 SCC 73;Gautam Sarup v. Leela Jetly (2008) 7 SCC 85;Heeralal v. Kalyan Mal (1998) 1 SCC 278;Modi Spinning and Weaving Mills Company Ltd. v. Ladha Ram and Co. (1976) 4 SCC 320;Steel Authority of India v. Union of India (2006) 12 SCC 233;Union of India v. Pramod Gupta (Dead)by Lrs. (2005) 12 SCC 1);Nichhalbhai Vallabhai v. Jawantlal Zinabha AIR 1966 SC 997;L. J. Leach and Co. Ltd. v. Jardine Skinner and Co. AIR 1957 SC 357; andVimal Chand Ghevarchand Jain v. Ramakant Eknath Jadoo (2009) 5 SCC 713, Sri K. Vivek Reddy, Learned Special Counsel, would submit that the petitioners cannot resile from their categorical admissions that the subject contract is an indivisible works contract; L and T has admitted in its Writ Petition that the contract between the petitioner and owner is an indivisible works contract; the averments in the Writ Affidavit cannot be treated as an inadvertent or a typographical error; the statement made by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection and installation of the turnkey project. These goods are tailor made for being utilised exclusively for the turnkey project. These contracts are, basically, in two parts - the first relating to supply of material and the second to erection and installation of equipment. The supply contract refers to the suppliers of material from whom the contractor is required to purchase the goods. After the goods are purchased from these pre-identified suppliers, most of whom are dealers outside the State, the goods are then transported by the contractor from outside the State to the State of Andhra Pradesh (now the States of Telangana and Andhra Pradesh). The supply contract stipulates that the contractor should purchase the goods from the identified suppliers outside the state on which tax is paid by the contractor under Section 3(a) of the CST Act; after purchasing the goods from the supplier, the contractor is contractually bound to sell the goods to the owner, during transit, by endorsement of the lorry receipts. While the goods are purchased by the contractor from the supplier at a lower price, the very same goods are sold by the contractor to the owner at a higher price. No tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious methods. It is the obligation of every citizen to pay taxes honestly without resorting to subterfuge. (Mc Dowell v. CTO (1985) 3 SCC 230;Banyan and Berry100;Azadi Bachao Andolan 98 ;CIT v. A. Raman and Co. AIR 1968 SC 49). While parties cannot be compelled to enter into agreements in a manner which would generate higher tax revenue, levy of tax, on transactions embodied in a document, would depend upon the meaning and content of the language used in accordance with the ordinary rules of construction. (C.I.T. v. Motors and General Stores (P) Ltd AIR 1968 SC 200 = (1967) 66 ITR 692) (SC)). The name given to a transaction by the contracting parties does not, necessarily, decide the nature of the transaction. The question always is what is the real character of the transaction, not what the parties call it. (Commissioners of Inland Revenue v. Wesleyan and General Assurance Society 30 TC II;Motors and General Stores (P) Ltd 103 ). The Court must examine the substance of the contract, and not be swayed by its form. In drawing a distinction between the form and substance of the arrangement, the Court cannot brush aside deeds, disregard the legal rights and liabilities arising un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b), if it is effected by transfer of documents of title after such movement has started, and before the goods are actually delivered. (TISCO v. S.R. Sarkar AIR 1961 SC 65 = (1960) 11 STC 655;A and G Projects and Technologies Ltd v. State of Karnataka (2009) 2 SCC 326)2008-VIL-40-SC. For a sale to fall under Section 3(b), the sale must be effected by the transfer of documents of title to the goods. The transfer of documents, contemplated by Section 3(b), is a transfer which, in law, amounts to delivery of the goods. Transfer of documents either by endorsement or delivery completes the transfer of title but, in the absence of an indication to that effect in the statute, the place where the documents are transferred is not necessarily the place of the sale. (S.R. Sarkar 106 ). Transfer of documents of title may be effected by handing them over. An endorsement to that effect on the documents is one mode of proving the fact. (The Dy. Commissioner of Commercial Tax, Madurai Division, Madurai v. A.R.S. Thirumeninatha Nadar Firm, Tuticorin (1968) 21 STC 184) (Madras HC) (DB)). A railway/lorry receipt is a document of title to the goods and, for all purposes, represents the goods. When t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 6(2)) shall not be exempt from tax under Section 6(2) unless the dealer, effecting the subsequent sale, furnishes to the prescribed authority (a) the E-I or E-II certificate from the registered dealer from whom the goods were purchased by him (in terms of Rule 12(4) of the CST (Registration and Turnover) Rules, 1957; and (b) a C or D form/certificate (in terms of Rule 12(1) of the 1957 Rules) from the registered dealer to whom the subsequent sale was made by him (ie the purchaser of the goods under the first sale becomes the vendor (seller) of the goods in the second (subsequent) sale); and (9) the certificates, referred to at point 8(a) and 8(b) above, are furnished in the prescribed manner within the prescribed time. Section 6(1) envisages payment of tax on all sales effected in the course of inter-state trade or commerce and, in effect, provides for a multipoint or multi-stage taxation regime for the inter-state sale of goods. Section 6(1) is subject to the other provisions of the CST Act. Section 6(2), which contains a non-obstante clause, has been introduced to avoid the cascading effect of multiple taxation. (Aand G Projects and Technologies Ltd.107). In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, 8th Edn. at Page 626); (c) if title passes upon delivery to the carrier, it cannot be a transit sale since title passes prior to movement; (d) if title passes only upon full payment, it is not a transit sale as title does not pass during movement; (e) if there is a pre-determined sale, or a predetermined buyer, prior to movement it cannot be a transit sale; (f) if payment is upon successful erection, it is not a transit sale since title passes only after movement is complete; (g) if the property passes after a certificate is issued by the owner, it cannot be a transit sale because title passes after movement; and (h) a sale after inspection cannot be a transit sale as title passes only after delivery; the second inter-state sale has, necessarily, to be a Section 3(b) sale because the language used in Section 6(2), to describe the second inter-state sale, is the same as in Section 3(b); it is not, and cannot be treated, as a third category of inter-state sale; and the CST Act contemplates only two categories of inter-state sales ie either a Section 3(a) or a Section 3(b) sale. In order to attract Section 6(2), it is essential that the sale must be a subsequent inter-State sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legh (1869) LR 4 Exch 26;Black-Clawson v. Papierwerke (1975) 1 ALL ER 847;Farrell v. Alexander (1976) 2 ALL ER 721). Ordinarily, a word or expression used at several places in one enactment should be assigned the same meaning so as to avoid a head-on clash between two meanings assigned to the same word or expression occurring at two places in the same enactment. It should not be lightly assumed that Parliament had given with one hand what it took away with the other . (Central Bank of India v. Ravindra (2002) 1 SCC 367;Farrell115;Madras Electric Supply Corporation Ltd (In Liquidation) v. Boarland (Inspector of Taxes) (1955) 1 All ER 753). It is, at all events, reasonable to presume that the same meaning is implied by the use of the same expression in every part of an Act. (CIT v. Venkateswara Hatcheries (P) Ltd., AIR 1999 SC 1225 = (1999) 3 SCC 632;Shamrao Vishnu Parulekar v. Distt. Magistrate, Thana AIR 1957 SC 23;Maxwell's Interpretation of Statutes, Edn. 10, p. 522), unless the context suggests otherwise, (Suresh Chand v. Gulam Chisti AIR 1990 SC 897 = (1990) 1 SCC 593;Raghubans Narain Singh v. U.P. Government AIR 1967 SC 465 = (1967) 1 SCR 489or there is something rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) IS THE LAW DECLARED BY THE SUPREME COURT, IN A and G PROJECTS and TECHNOLOGIES LTD. V. STATE OF KARNATAKA BINDING ON THIS COURT? In Aand G Projects and Technologies Ltd. 107 , the appellant contended that there were three sales, the second and the third sales were subsequent sales, and they were exempt from tax under Section 6(2) of the CST Act; this argument of the appellant stood rejected by the assessing authority who held that the appellant's turnover fell under Section 3(a) of the CST Act, all the three sales were Section 3(a) sales, and consequently the appellant was not entitled to exemption under Section 6(2) of the CST Act. Relying on the proviso to Section 9(1) of the CST Act, the assessing authority held that the State of Karnataka was competent to levy tax. It is in this context that the Supreme Court held:- .......Analysing Section 6(2), it is clear that sub-section (2) has been introduced in Section 6 in order to avoid cascading effect of multiple taxation. A subsequent sale falling under sub-section (2), which satisfies the conditions mentioned in the proviso thereto, is exempt from tax as the first sale has been subjected to tax under subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 107 , it is nonetheless binding as the High Court is bound even by the obiter-dicta of the Supreme Court. An 'obiter dictum', as distinguished from a ratio decidendi, is an observation by the Court on a legal question suggested in a case before it, but not arising in such manner as to require a decision. (State of Haryana v. Ranbir (2006) 5 SCC 167;ADM, Jabalpur v. Shivakant Shukla (1976) 2 SCC 521;Girnar Traders76;Divisional Controller, KSRTC v. Mahadeva Shetty (2003) 7 SCC 197 = 2003 SCC (Cri) 1722;Director of Settlements, A.P. v. M.R. Apparao (2002) 4 SCC 638). Obiter dicta of the Supreme Court is binding upon other courts in the country (Sanjay Dutt v. State through CBI, Bombay (1994) 5 SCC 402) in the absence of a direct pronouncement on that question elsewhere by the Supreme Court (Oriental Insurance Co. Ltd. v. Meena Variyal (2007) 5 SCC 428), and is entitled to considerable weight. (CIT v. Vazir Sultan and Sons (1959 Supp (2) SCR 375 = AIR 1959 S.C. 814). We must express our inability to agree with the submission, urged on behalf of the petitioners, that the scope of Section 6(2), as analysed therein, need not be followed. (iv) CAN A CONTRACT OF SALE OF FUTURE GO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are defined in Section 2(6) and 2(14) of the 1930 Act. Section 20 of the 1930 Act is applicable only to specific goods. The goods, which are the subject matter of these contracts, are future goods as they were required to be purchased by the petitioner-contractor only after the contract was entered into. Section 20 of the 1930 Act applies only if there is an unconditional contract for sale. In these Writ Petitions the contracts of sale, which purport to effect the present sale of future goods , are merely agreements to sell, and not a Sale (Section 6(3) of the 1930 Act). Section 20 stipulates that the time for payment of price can be postponed. The petitioners supply contracts do not postpone payment, but payment thereunder is itself conditional on successful erection. Section 23 of the 1930 Act relates to the sale of unascertained goods and its appropriation. Thereunder title, with respect to future goods, passes on fulfilment of the following conditions (a) the goods must be in a deliverable state, (b) the goods must be unconditionally appropriated to the contract, and (c) there must be assent of the buyer if the appropriation is by the seller. The phrase deliverable state has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods, in the sense that future goods include goods not yet in existence, or goods in existence but not yet acquired by the seller; future goods, for the purposes of passing of property, can never be specific; future goods, if and when sufficiently identified, may be specific goods; goods to be manufactured by the seller are future goods; under Section 23 of the Sale of Goods Act, when there is a contract of sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained; where there is a contract for the sale of unascertained or future goods by description, the property in the goods passes to the buyer only when the goods of that description, and in a deliverable state, are unconditionally appropriated to the contract; and it is this unconditional appropriation which would pass the property. In National Thermal Power Corpn. Ltd. 136 ; and20th Century Finance Corporation Ltd. 137 the Supreme Court held that, where the goods are not in existence, such transactions may be effected by the delivery of the goods in which case the taxable event would be on the delivery of goods. In the present batch of Writ Petitions the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration. A transaction of sale is subject to tax under the CST Act on the completion of the sale. A mere contract of sale is not a sale within the definition of sale in Section 2 (g) thereof. (TELCO Ltd. 62 ;S. R. Sarkar 106 ;Ben Gorm Nilgiri Plantations Co., Conoor v. Sales Tax Officer, Special Circle, Ernakulam (1964) 7 SCR 706 = AIR 1964 SC 1752). In Chem-Dyes Corporation3, the Division bench of the Gujarat High Court held that one of the conditions for applicability of Section 3(b) is sale of goods, and not an agreement to sell; and both the conditions should be satisfied - sale as well as transfer of documents of title to the goods - during their movement from one State to another. Without expressing any opinion on the merits of the submission we shall proceed on the premise that the subject contracts, which provide for the sale of future goods, is an agreement to sell and the sale of goods took place subsequent thereto. It is necessary, therefore, to ascertain whether the sale of goods, by the petitioner-contractor to the owner, took place when the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of their submission that the sale of goods, by the petitioners-contractors to the owners, is only when the goods were in movement from one State to another. It is necessary, therefore, to examine these contractual provisions. (v) TRANSIT INSURANCE:- It is contended, on behalf of the petitioners, that, unless the goods are sold and title in the goods vest with the owner, there is no obligation on the owner to take and cover the goods under insurance policies especially transit insurance, the cost of which is wholly borne by the owner. Article 13.1 of the LandT - Konaseema contract stipulates that from notice to proceed date, until the issuance of the site test certificate for the equipment, the Owner (Konaseema) shall take a combined insurance for transit, erection, and all risks; and the supplier and its sub-suppliers will be mentioned as a co-insured in the policy to the extent of marine transit and third party liability insurance. Clause 8.1.1 of the Seimens - Power Grid agreement stipulates that all the equipment and materials, being supplied by Seimens Ltd, shall be kept completely insured by them at their cost from the time of despatch from their works, upto the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 4(3) and 4(4) of the 1930 Act would show that (a) it is not as if every condition would convert a sale into an agreement to sell; Sections 4(3) and 4(4) of the 1930 Act make it clear that any encumbrance or condition, deferring passage of title, would make the sale conditional, and transfer would take place only upon fulfilment of the conditions; Section 4(4) amplifies and introduces the nexus test; it is not all or any conditions, but only such conditions, which need to be fulfilled, subject to which the property in the goods would be transferred; the condition, if any, should be such that it encumbers or limits the transfer of title to the goods; none of the clauses, relied upon by the revenue, encumber transfer of title; the contracts provide separate parameters for damages to be claimed on the supply of goods and service; compensation is fixed for delay in delivery of goods as per the schedule dates for individual goods, and is not dependant on service and vice versa; and, in the case of erection and commissioning, the contract provides for completion of the work in a defined manner which is on integration of individual goods. It is contended, on behalf of the revenue, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total contract value. Section 12 of the 1930 Act relates to conditions and warranties. Under sub-section (1) thereof, a stipulation in a contract of sale, with reference to goods which are the subject thereof, may be a condition or a warranty. Section 12(2) states that a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. Section 12(3) states that a warranty is a stipulation collateral to the main purpose of a contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. Section 12(4) stipulates that whether a stipulation in a contract of sale is a condition or a warranty depends, in each case, on the construction of the contract; and a stipulation may be a condition, though called a warranty in the contract. Section 16 of the 1930 Act relates to implied conditions as to quality or fitness and, under sub-section (1) thereof, where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell future goods is, in view of Section 4(3) of the 1930 Act, an agreement to sell and not a contract of sale. In case the contract is conditional, Section 4(4) stipulates that an agreement of sale becomes a sale when the conditions, subject to which the property in the goods is to be transferred, is fulfilled. As the quality and fitness of the goods is, in terms of Section 16(1) of the 1930 Act, an implied condition, failure to fulfil the condition would not result in an agreement to sell becoming a sale, and the property in the goods would not pass from the petitioner-contractor to the owner. Transfer of title to the goods, as shall be elaborated hereinafter, passes only after post-delivery inspection of the goods, on completion of its erection and installation in the turn-key project, and on a take over certificate being issued by the owner to the petitioner-contractor thereafter. As compliance with these conditions, by the petitioners contractors, take place only after completion of movement of the goods, the liquidation damages clause in the subject contracts would not bring the sale within the ambit of Section 6(2) of the CST Act. The finding recorded by the revenue in this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods passes to the owner, the owner cannot issue equipment or material as free issues. It is submitted, on behalf of the revenue, that there cannot be a pre-existing bailment agreement as such an agreement can be entered with the bailor (owner) only when the bailor is in possession of the goods; the essence of a bailment is a transfer of possession, and not ownership; and the contract of bailment would require the goods to be returned in the very same condition, and not in a completely different form; while the owner is said to have entrusted different goods to the petitioners-contractors, what was returned to them was a completed turn-key project. Article 2.1.1 (B) of the LandT - Konaseema Erection Contract stipulates that the scope of the contract shall include, in relation to erection, commissioning and testing of equipment free-issues to the contractor by the owner; to receive such equipment, from the owners contractor for transportation on behalf of the owner, at the facility site; and to store at the facility site as designated by the owner under the terms and conditions of bailment. In terms of the Alstom - GVK contract, a material received/issued certificate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the bailee. Wherever there is a delivery of property on a contract for an equivalent in money or some other valuable commodity, and not for the return of the subject matter in its original or an altered form, it is a transfer of property for value - it is a sale and not a bailment. (The South Australian Insurance Company v. William Beavis Randell and Samuel Randell (1869) Law Reports (III) Appeal Cases 101) . The test is whether the identical subject matter was to be restored either as it stood or in an altered form; or whether a different thing was to be given for it as an equivalent for, in the latter case, it is a sale and not a bailment. (William Beavis Randell and Samuel Randell 154 ;Indian Metal and Metallurgical Corporation v. State of Madras (1963) 14 STC 788) (Madras HC) (DB); M.M. Traders v. State of M.P. 2010 (4) M.P.L.J. 515 = (2010) 36 VST 356) (MP HC). - (DB)). When the petitioner and the owner entered into the subject agreement, neither the petitioner nor the owner were in possession of the goods, as the goods had to be acquired thereafter from the supplier. It is difficult, therefore, to hold that it is a bailment agreement. As is evident from Section 148 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e LandT - Konaseema supply contract would govern, as the other clauses in the agreement can be read harmoniously therewith; the odd reference, of full payment for transfer of title, under Article 17 of the contract, has to be subsumed only as an irrelevance, and an out of context reference, as this condition does not gel with any other clause in both the agreements. It is contended, on behalf of the revenue, that the question of passing of title should be ascertained by construing the contract as a whole and the surrounding circumstances, and not merely the title clause; even otherwise, the title clause in the LandT - Konaseema Supply contract shows that title passes at the time of incorporation and not during movement; the title passes, under the LandT Vemagiri, Alstom Supply Contracts and Siemens title clauses, only when the seller dispatches the goods i.e., prior to movement. Clause 17 of the L and T - Konaseema supply contract stipulates that the legal title to the property in the equipment shall be deemed to have been transferred from the supplier to the owner when the equipment has been delivered to the owner's contractor for transportation (carrier), subject to transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sk, loss and damage of goods till they are taken over by the owner shows that the parties intended, in terms of Section 26 of the 1930 Act, that title would pass to the owner only after completion of movement. If parties really intended otherwise, the supplier would then have been absolved of all responsibility after despatch of goods ex-works. Under the L and T - Konaseema supply contract, full payment is made only after a site test certificate is issued by the owner after inspection and successful erection. Likewise, under Alstom supply contracts, title to the goods passes either upon payment for supply in full (which is only after completion of erection) or when the goods were delivered to the carrier exworks Indian factory ie prior to commencement of movement. Under the Seimens - Power Grid supply contract the responsibility for all risk, damages and losses relating to the goods continue with the supplier till the goods are taken over by Power Grid (after erection) despite title allegedly passing on ex-works despatch with negotiation of despatch documents. A transit sale, to be exempt under Section 6(2) of the CST Act, is a sale whereby transfer of title to the goods takes p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses in the Land T Konaseema Supply Contract, Land T Vemagiri Onshore Supply Contract, and Siemens Power Grid Contract, show that, in addition to post-despatch inspection, the supply contracts (as opposed to the erection contracts) also contemplate a certification after erection; by virtue of the said clause, the owner certifies as to the successful operation of the facility; the said certification is given after the owner inspects the facility, and finds that all the units and components, which have been supplied, are working; the scope of certification extends not only to the civil work, but also to the goods supplied under the supply contract; in all the contracts, the supplier becomes entitled to full payment only upon receipt of such certification; the payment is linked to successful inspection and certification; if the contract has an inspection or a certification clause, title does not pass till the inspection and certification are successful, and the buyer / owner has indicated his approval; the Supreme Court, in Usha Belltron158, held that title passes only upon certification; and the petitioners contention that the taking over certificate was merely for ensuring proper qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their warranty obligations. Clause 6.1 of the bid document stipulated that delivery of the goods shall be made by the supplier in accordance with the terms of the contract; and the goods were to remain at the risk of the supplier until delivery was completed. The Supreme Court held that clause 5.5 and 6.1 of the bid document clearly indicated that the property in the goods remained at the risk of the appellant till delivery was completed; it showed that delivery would be completed only after the take-over certificate was issued; as per Section 19 of the Sale of Goods Act, the property in the goods passes when the parties intended it to pass; in this case the contract provided that property in the goods does not pass till after delivery, and after successful testing and issuance of the take-over certificate; and the High Court was right in concluding that the property in the goods had not passed at the time the goods entered the municipal limits. In Chem-Dyes Corporation 3 the assessee purchased goods from Bombay, despatched them to Rajkot, and handed over the railway receipts to the purchasers of the goods at Rajkot. These purchasers, after taking delivery of the goods from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the contract would fall within the ambit of the phrase other similar terms in Section 24. The presence of an inspection and certification clause in the supply contract defers passing of title till the owner has expressed its assent. Such assent is given only after inspection and certification. The law declared by the Supreme Court, in Usha Beltron Ltd 158 , is binding on this Court. It is not for the High Court to distinguish a binding precedent on the specious plea that certain aspects were not noticed by the Supreme Court. Even otherwise, reliance placed on behalf of the petitioners, on Section 26 of the 1930 Act, is misplaced. Clause 2.3 (iii) of the Seimens - Power Grid contract makes it clear that, notwithstanding that title would pass to Power Grid ex-works despatch and with negotiation of despatch documents, the responsibility for all risk of loss and damage to the goods continued with the Seimens Ltd till its taking over by Power Grid on completion of erection of the plant. Section 26 stipulates that risk, primafacie, passes with the property and, thereunder, unless otherwise agreed, the goods remain at the sellers risk until the property therein is transferred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State to another, notwithstanding the transit sale clause in some of the subject contracts. As transfer of title to the goods does not pass to the employer, during movement of the goods from one State to another, the sale of goods, under the subject contracts, is not a transit sale and rejection of the petitioners claim for exemption, under Section 6(2) of the CST Act, by the respondents-authorities cannot be faulted. (x) PAYMENT ON MILESTONE BASIS:- It is contended, on behalf of the petitioners, that Section 2(g) of the CST Act recognises that a sale is also occasioned by deferred payment of the amount due; the terms of payment as agreed upon, and the passing of title, are independent of each other; transfer of title is not kept in abeyance merely because payment is deferred; the contention, that a sale is not complete till final payment is made, if accepted, would defeat the very foundation of sales tax law that transfer is complete - whether the seller receives consideration or not; whatever restrictions apply to a normal sale, would equally apply to a deemed sale; the payment terms are not milestones; percentage-wise payment terms have been provided for supply of goods; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract of sale, the contract, not having come into existence during the movement of goods from one State to another, would not fall within the ambit of Section 6(2) of the CST Act. A contract of sale of goods may be defined as a mutual agreement between the owner of the goods and another that the property in the goods shall, for some price or consideration, be transferred to the other, at such a time and in such a manner, as is then agreed. (Indian Metal and Metallurgical Corporation155). In order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring title to the goods, it must be supported by money consideration and, as a result of the transaction, the property must actually pass in the goods. Unless all these elements are present, there would be no sale. (Gannon Dunkerley and Co. (I)64;Hindustan Aeronautics Ltd.65; andMember Board of Revenue v. Swaika Oil Mills (1977) 4 SCC 286). Section 4(1) of the 1930 Act stipulates that a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price. Section 2(10) of the said Act defines pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses aforementioned, is only after successful completion of erection, and not prior thereto. This clause also makes it clear that the parties to the contract did not intend that the property in the goods would pass from the petitioners-contractors to the owners when the goods were in movement from one State to another. Price is as an essential element of a contract of sale of goods. It is only a transfer of property in goods for cash or deferred payment or any other valuable consideration which constitutes a sale under Section 2(g) of the CST Act.Blacks Law Dictionary defines deferred payment as a principal and interest payment which is a postponed and instalment payment. The essential characteristics of a deferred payment is that, while there is certainty of payment, the payment is postponed. While the buyer is bound to make payment, a contract may provide for deferred payment , enabling payment to be postponed to a date even after title to the goods have passed. The essential distinction between a deferred payment and fulfilment of conditions after which payment is to be made must be borne in mind. While there is certainty of payment, and the date of payment is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereupon is misplaced. Section 19(1) of the 1930 Act stipulates that, where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Section 19(2) stipulates that, for the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case. Section 19(1) relates to specific or ascertained goods, whereas the goods in the present case are future goods as the petitioner-contractor was not in the possession of the goods when the supply contract was executed. Section 19(2) indicates that the time of passing of title has to be ascertained by looking at the terms of the contract, conduct of the parties, and the circumstances of the case. The Court is required, by Section 19(2), to go beyond the terms of the contract to ascertain the intention of the parties. In the present case, the terms of the contract itself show that title has not passed during movement. Section 19(3) of the 1930 Act stipulates that, unless a different intention appears, the rules contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Supreme Court, in Husenali Adamji and Co143, is that (i) in a contract for sale of goods, the time of passing of title has to be ascertained on a reading of the contract as a whole; (ii) if the contract contemplates inspection after delivery, the title passes only upon delivery, notwithstanding the fact that the contract also contemplates pre-delivery inspection; (iii) in a contract, for the sale of future goods, title passes only when there has been a unconditional appropriation of the goods to the contract; consequently, if the contract contemplates post-delivery inspection, appropriation of the goods to the contract only happens after inspection; and a mere endorsement on the railway receipts does not transfer title. The rule of construction, applicable to all written instruments, is that the instrument must be construed as a whole in order to ascertain the true meaning of its several clauses. Just as a document cannot be interpreted by picking out only a few clauses ignoring the other relevant ones, in the same way the nature and meaning of a document cannot be determined by its end-result or one of the results or the consequences which flow from it. The nomenclature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act) in an indivisible works contract has considerable force, it is wholly unnecessary for us to examine this aspect in adjudicating the issues which arise for consideration in this batch of writ petitions. Suffice it to hold that, in the indivisible works contracts, which are the subject matter of these Writ Petitions, the various clauses of the contracts show that, notwithstanding the transit-sale clause, the parties intended to sell the goods (ie for the title in the goods to pass) only after completion of erection of the plant, and on issuance by the owner of a certificate as proof of having taken over the turnkey project. (xiii) CAN ONE TRANSACTION OF SALE FALL BOTH UNDER SECTION 3(a) and SECTION 6(2) OF THE CST ACT? It is contended, on behalf of the revenue, that a single transaction of sale would not fall both under Section 3(a) and 6(2) of the CST Act; and, as the petitioners contention that the sale of goods in the subject contracts fall within the ambit of Section 6(2) of the CST Act necessitates rejection, their contention that the transaction would also fall under Section 3(a) must be negatived. Can the very same contract of sale which occasions movement of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CST Act. In the illustration given hereinabove if, after the goods are delivered in State Y , dealer C enters into a contract, for the sale of the very same goods, with dealer D in State Z , the movement of goods from State Y to State Z is occasioned by the contract of sale between dealer C and dealer D , and is a second Section 3(a) sale liable to tax under the CST Act. The test to determine whether a sale of goods takes place in the course of inter-State trade and commerce is stipulated only by Section 3 of the CST Act. Section 6(2) merely exempts from tax the subsequent sale which takes place in the course of inter-state trade and commerce. The nature of the subject contracts, in the present batch of writ petitions, can be better explained by way of illustrations. Dealer A enters into a contract with dealer C in State Y that dealer A would purchase the goods, which dealer C requries, from dealer B in State X ; transport the said goods from State X to State Y ; during the course of movement of the goods from State X to State Y , dealer A would sell the goods to dealer C by transfer of document of title; and, thereby, claim that the sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 667;Azadi Bachao Andolan98;Bank of Chettinad Ltd. v. CIT Madras (1940) 8 ITR 522 (PC);Motors and General Stores (P) Ltd103). There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. (Mahim Patram Private Ltd. v. Union of India (2007) 6 VST 248 (SC);State of West Bengal v. Kesoram Industries Ltd. (2004) 10 SCC 201). It is no doubt true that, in case of doubt or ambiguity in the statute, the construction, in favour of the taxpayer and against the Revenue, should be accepted. (Mahim Patram Private Ltd.163;Sneh Enterprises v. Commissioner of Customs, New Delhi (2006) 7 SCC 714;M/s Ispat Industries Ltd. v. Commissioner of Customs, Mumbai (2006) 12 SCC 583 = 2006 (9) SCALE 652). If the statutory provision does not suffer from any ambiguity, grant of a relief, in the teeth of the express provisions of the statute to the contrary, is not permissible. On equitable considerations, the Court cannot ignore or overlook the provisions of the statute. Equity must yield to the law. (Shamsu Suhara Beevi v. G. Alex (2004) 8 SCC 569). On a literal construction, it is evident that a subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(a) OF THE CST ACT, MERELY BECAUSE THEIR CONTENTION, THAT THE SUBJECT SALES, FALL UNDER SECTION 6(2) OF THE CST ACT, WAS REJECTED? While the submission urged on behalf of the petitioners, that the sale of goods by the petitioners-contractors to the owner falls within the ambit of Section 6(2) of the CST Act, does not merit acceptance, are the petitioners thereby barred from contending that, alternatively, these transactions are sales falling within the ambit of Section 3(a) of the CST Act? Sri K. Vivek Reddy, Learned Counsel for the respondent, would submit that, since the petitioners have invoked Section 3(a) (without any foundation in the pleadings), and as an alternative argument, the respondents are making their submissions on the same; the petitioner's plea that the second sale may also be treated as a Section 3(a) sale is destructive of their claim that it is a transit sale under Section 6(2); the moment the petitioners assert that the second sale is a Section 3(a) sale, it automatically ceases to be a Section 3(b) sale and a Section 6(2) sale; the petitioners can only assert that the sale is either a Section 3(a) or a Section 3(b) sale; if the petitioners assert bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to decide matters, and the ambit of the matters to be heard by a Tribunal having jurisdiction to deal therewith. While, in the latter, the question of acquiescence or irregularity may be considered and overlooked, in cases where the question is of the jurisdiction of the Court/Tribunal to make the order, no question of acquiescence or consent can affect the decision. (U.C. Bank v. Their Workmen AIR 1951 SC 230; and Hakam Singh v. Gammon (India) Ltd AIR 1971 SC 740;Estate Officer and Manager (Recoveries), APIIC Ltd. v. Recovery Officer, Debts Recovery Tribunal 2003 (5) ALT 216 (DB)). Be it a Section 3(a) or a 3(b) or a 5(2) sale or a sale exempt under Section 6(2) of the CST Act, the respondents lack jurisdiction to subject such sales to tax under the A.P. VAT Act treating them as intra-state sales. Even if the petitioners had not contended, alternatively, that it is a Section 3(a) sale, their acquiescence or consent would not confer jurisdiction on the respondents to subject these transactions to tax under the AP VAT Act. If, from the material on record, it can be established that the sale is a Section 3(a) sale, then the jurisdiction of the respondent authorities to levy tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement did not occasion the inter-state movement; the inter-state movement of goods was pursuant to the contract between the supplier and the petitioner-contractor, and not between the petitioner contractor and the owner; the deeming fiction in Section 3(a) lays down the following ingredients: (a) there must be a sale or purchase; and (b) the sale or purchase must occasion the inter-state movement; a sale occasioning inter-state movement (Section 3(a)), export (Section 5(1)) or import (Section 5(2)), would arise only if there is privity between the seller and the foreign buyer; if there is any intermediary to effect the sale, it is not exempt from tax; to overcome the ruling in Mohd. Serajuddin v. State of Orissa (1975) 2 SCC 47,the Parliament introduced Section 5(3) in the CST Act which is confined only to exports; the law declared by the Constitution Benches of the Supreme Court, in Ben Gorm144;Coffee Board v. Jt. CTO AIR 1971 SC 870 = (1969) 3 SCC 349;Binani Bros v. Union of India (1974) 1 SCC 459andSerajuddin174, continue to hold the field in respect of a Section 3(a) or a 5(2) sale; if Parliament intended to dispense with the rule of privity, and thereby include even two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred the penalty prescribed in their dealership agreements, if they had failed to abide by the terms requiring them to move the goods outside the State of Bihar; where, under the terms of a contract of sale, the buyer is required to remove the goods from the State in which he purchased those goods to another State, and when the goods are so moved, the sale in question must be considered as a sale in the course of inter-State trade or commerce; and the ratio of the decision in Coffee Board (I)175, did not bear on the facts wherein, under the terms of the contract of sale, the purchasers were required to remove the goods from one State to another State. In Union of India v. K.G. Khosla and Co. Ltd. (1979) 2 SCC 242, the Supreme Court observed that a sale would be an inter-State sale even if the contract of sale does not itself provide for the movement of goods from one State to another provided, however, that such movement was the result of a covenant in the contract of sale or was an incident of the contract. A similar view was expressed in Sahney Steel and Press Works Ltd. v. CTO (1985) 4 SCC 173; and National Thermal Power Corpn. Ltd., 136 . In DCM Ltd. v. CST (2009) 4 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n inter-State sale or not, it has to be answered with reference to Section 3 alone. (Zunaid Enterprises 47 ;S.R. Sarkar 106 ). A sale being, by definition, a transfer of property becomes taxable under Section 3(a) if the movement of goods from one State to another is under a covenant or incident of the contract of sale, and the property in the goods passes to the purchaser otherwise than by transfer of documents of title when the goods are in movement from one State to another. It does not matter in which State the property passes. (S.R. Sarkar 106 ). The sale must be shown to have occasioned the movement of the goods from one State to another. The movement must be the result of a covenant or incident of the contract of sale (State of Bihar v. TELCO180;Ben Gorm 144 ;State Trading Corporation of India Ltd. v. State of Mysore 1963 (14) STC 188 = (AIR 1963 SC 548;K.G. Khosla and Co. (P) Ltd. (I)177;Singareni Collieries Co. v. Commissioner of Commercial Taxes, Hyderabad AIR 1966 SC 563;Sahney Steel and Press Works Ltd. 182 ;State of Orissa v. K.B.Saha and Sons Industries (P) Ltd. (2007) 9 SCC 97;TELCO Ltd. 62 ; and the property in the goods may pass in either State. (K.B.Saha and So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mutual understanding between the buyer and the seller arising from the nature of the transaction, the sale must be held to be in the course of inter-State trade or commerce. (Commissioner of Commercial Taxes v. Bhag Singh Milkha Singh (1974) 34 STC 535 (Pat);State of Travancore-Cochin v. Bombay Co. Ltd., Alleppey A.I.R. 1952 S.C. 366;Ben Gorm 144 ; andState of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory A.I.R. 1953 S.C. 333) . If the inter-state movement of goods was within the contemplation of the parties, and if a reasonable presumption can be drawn that, to fulfill the terms of the contract, such inter-state movement of goods is necessary, it would fall under Section 3(a) of the CST Act. (ABB Limited v. Commissioner, Delhi Value Added Tax (2012) 55 VST 1 (Delhi HC) - (DB)). What is important is that the movement of goods and the sale must be inseparably connected. (K.B. Saha and Sons Industries (P) Ltd., 189 ). Even 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 otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that some of the factors present in the instant cases are present or absent in some other cases, in which the sale was held either to be a local sale or an inter-state sale, hardly serves any useful purpose. (Indian Oil Corporation Ltd. 194 ). In the present batch of Writ Petitions, the link is the requirement of the supply contracts. Article 3 of the LandT Konaseema supply contract relates to sub-suppliers. Appendix - E is the list of major suppliers agreed to by the parties, and from which the contractor shall select for the provision of materials under the contract. The agreement between Seimens and Powergrid required Seimens to procure items from the suppliers appearing in the Compendium of Suppliers as agreed to by Power Grid. Article 3.1 of the Alstom-GVK supply contract refers to Appendix - K which contains a list of suppliers agreed to by the parties, and from whom Alstom was obligated to select the suppliers. Clause 2.6.1 of the Land T-Konaseema supply contract confers a right on the owner to depute personnel to the manufacturers factory to witness test of material as identified in Appendix - J to the agreement. Under the Seimens-Powergrid agreement, Power Grid res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first sale and the second sale can only be inter-state sales. It is contended, on behalf of the revenue, that, for Section 3(a) to apply, there must be a contract of sale which results in passing of title; consequently, an agreement of sale would not fall within the ambit of sale because it does not have the effect of transferring title; the supply agreements, between the petitioners and the owners, do not relate to specific goods, but to future goods ; since the supply agreement seeks to pass title in future goods, the said agreement does not result in passing of title in the goods, and it is only an agreement to sell; the title passes only when the goods have come into existence, and when the same have been unconditionally appropriated to the contract; and, consequently, any movement pursuant to the supply agreement, which is only an agreement to sell, is not a sale occasioning movement . A purchase made inside a State, for sale outside the State, cannot by itself be held to be in the course of inter-State trade. (Endupuri Narasimham and Son v. State of Orissa AIR 1961 SC 1344;Bengal Immunity Company Limited 12 ). To make a sale in the course of inter-State trade, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 SCC 358, the Supreme Court held that what was said in Balabhagas Hulaschand138 was that the word sale , as used in Section 3 (a) and Section 4(2) (a) and (b) of the CST Act was wide enough to include not only a concluded contract of sale but also an agreement of sale provided that the latter stipulated that there was a transfer of property or movement of goods; and the ratio of that decision was inapplicable to Section 5(3) which dealt with the question as to when a penultimate sale shall also be deemed to be in the course of export. It is evident that, atleast for the purposes of Section 3(a) of the CST Act, the word sale would include within its ambit an agreement of sale also. In so far as Section 3(a) of the CST Act is concerned, there is no distinction between unascertained or future goods and goods which are already in existence if, at the time when the sale takes place, these goods have come into actual existence. (K.G. Khosla and Co. Ltd. 181 ;National Thermal Power Corpn. Ltd., 136 ; and Manganese Ore (India) Ltd. 185 ). For the purpose of application of Section 3 (a) of the CST Act, the question whether the contract is a forward contract or not makes no material d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular dated 23.1.2006, has held that if there is a contractual obligation to import goods from other States, and such movement has an inextricable link with the contract, such value should be excluded from the scope of levy of VAT; the impugned assessment orders, raising the demand, are contrary to the circular of the Commissioner; if the goods have moved from outside the State, and have been used in contract, the States have no power to levy tax; and such turnover is protected from State levy in view of the restrictions under Article 286 of the Constitution of India read with Section 4(7)(g) of the AP VAT Act. Section 4(7)(g) of the AP VAT Act, (as inserted by Act 5 of 2007 dated 22.01.2007 with effect from 01.09.2006), stipulates that, notwithstanding anything contained in clauses (a) to (f) of Section 4(7), no tax shall be leviable on the turnover relating to the transfer of property in goods, whether as goods or in some other form involved in the execution of a works contract, if such transfer from the contractor to the contractee constituted a sale in the course of inter-State trade or commerce under Section 3 or a sale outside the State under Section 4, or a sale in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to Section 3 of the CST Act. (Gannon Dunkerley and Co. (II) 63 ;Larsen and Toubro 152 ). If a sale of goods falls within the ambit of Section 3(a) of the CST Act, the State legislature cannot subject it to tax under the State Act. By introducing Section 4(7)(g) in the A.P.VAT Act, the State Legislature has recognised that there can be a deemed interstate sale under clauses (a) and (b) of Section 3, and a deemed sale in the course of import under Section 5(2) of the CST Act involved in the execution of a works contract. It also acknowledges that such a deemed sale, either under Section 3(a) and (b) or under Section 5(2) of the CST Act, cannot be subjected to tax under the A.P. VAT Act. (v) INTER-STATE WORKS CONTRACTS:- It is contended, on behalf of the petitioners, the impugned orders failed to notice that there is an inter-state movement of goods, and such movement is occasioned by the works contract executed by the petitioner for the owner/contractee; the contracts with the owner occasioned the interstate movement, and delivery is effected to the owner at the site; the petitioner has procured the goods from outside the State as a necessary requirement under the contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69 ). The expression sale of goods in Entry 48 of List II of the VII Schedule to the Government of India Act, 1935 had the same meaning which it had in the Sale of Goods Act, 1930. (Banarsi Das Bhanot 71 ). As a similar expression is used in Entry 54 of List II to the VII Schedule to the Constitution, the meaning of goods under Section 2(7) of the Sale of Goods Act was held applicable to Entry 54 as well. In Gannon Dunkerley and Co. (I) 64 , the Supreme Court held that, to constitute a transaction of sale there should be an agreement, express or implied, relating to the goods to be completed by passing of title in those goods; both the agreement and the sale should relate to the same subject-matter; where the goods delivered under the contract are not the goods contracted for, the purchaser has the right to reject them, or to accept them and claim damages for breach of warranty; there cannot be an agreement relating to one kind of property and a sale as regards another; and, on a true interpretation of the expression sale of goods , there must be an agreement between the parties for the sale of the very goods in which, eventually, the property passes. Even after the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69 ;Kone Elevator India (P) Ltd. 67 ). Article 366(29-A)(b) serves to bring transactions, where the essential ingredients of sale defined in the Sale of Goods Act, 1930 are absent, within the ambit of sale or purchase for the purposes of levy of sales tax. In other words, transfer of movable property in a works contract is deemed to be a sale even though it may not be a Sale within the meaning of the Sale of Goods Act. (Larson and Toubro 215 ). The term 'works contract', in Article 366(29-A)(b), encompasses a wide range and many varieties of contracts. Once the characteristics or elements of a works contract are satisfied in a contract then, irrespective of the additional obligations, such a contract would be covered by the term 'works contract'. Nothing in Article 366(29-A)(b) limits the term works contract to a contract for labour and service only, and it is a contract for undertaking or bringing into existence some works . The Parliament had all genre of works contract in view when clause 29-A was inserted in Article 366. (Pro Lab. 69 ;Kone Elevator India Pvt. Ltd. 67 ;Larsen and Toubro Ltd. 70 ). The narrow meaning given to the term works contract i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and conditions would mutatis mutandis apply to both sets of transactions; it is not open to the State tax authorities to tax what is otherwise an inter-state sale or an export/import sale as a local sale; Parliament conceived of an inter-State sale in the execution of a works contract, notwithstanding the theory of accretion; the facts of the present case clinchingly show that there is an inter-state sale under Section 3(a), and a sale in the course of import under Section 5(2) of the CST Act; from 13.5.2002 onwards, inter-state works contracts are liable to be taxed under the CST Act; if the goods have moved from other States, for the specific use in a works contract for a particular contractee, transfer of property in the goods takes place in the course of inter-state trade; if the argument of the assessing authority is accepted, there can be no inter-state sale at all in a works contract; and this would be contrary to the intention of Parliament which has defined works contract in Section 2(ja) of the CST Act with effect from 01.04.2005. Sri K. Vivek Reddy, Learned Special Counsel, would submit that, even if the goods have moved from outside the State, since they culmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 186 ;East India Cotton Manufacturing Company v. The State o f Haryana (1993) 104 PLR 269). The mere fact that the goods, which moved from one State to another, were incorporated in the works within the States of Telangana and Andhra Pradesh does not make the deemed inter-state sale an intra-State sale within the States of Telangana and Andhra Pradesh. While it would still continue to be an inter-state deemed sale of goods, falling within the ambit of Section 3(a) of the CST Act, its incorporation in the works within the State is not without significance. The charging section and the computation provisions of a taxing statute together constitute an integrated code. (Mahim Patram Private Ltd. 163 ;C.I.T., Bangalore etc. v. B.C. Srinivasa Setty (1981) 2 SCC 460). The measure or value, to which the rate of tax is applied for computing the tax liability, is one of the components of tax. (Mahim Patram Private Ltd.163;M/s. Govind Saran Ganga Saran v. Commissioner of Sales Tax (1985) Supp. SCC 205). While tax is imposed on the transfer of property in the goods, involved in the execution of a works contract, the measure, for the levy of tax contemplated by Article 366(29-A)(b), is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are procured locally or from outside the State; if the Contractor procures the goods locally from the approved vendors, it would not be a breach of the sale agreement; and delivery of the goods within the State locally, by way of a branch transfer, is permissible and would not constitute a breach of the contract. It is for the contracting parties to decide how, and from where, the goods should be purchased. It is not open to the State to contend that, even if the suppliers are identified in advance, they should have effected branch transfers, and then sold the goods to the contractee. When the goods move to a pre-determined buyer in the destination State, then the State from which the goods commence their journey would treat it as inter-State movement under Section 3, and levy tax without giving exemption towards branch transfer. As noted hereinabove the goods, in the present cases, are tailor made for its use in the execution of the turnkey project. They are not off-the shelf goods, which can be sold to any other person if the owner refuses to receive them. The contracts provide stringent conditions on specifications, manufacture and supply of goods. The contract entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (b) of Section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced. Where a question arises, in which State is the tax under the CST Act leviable, one must look to and apply the test prescribed in Section 9(1). No other provision is relevant on this question. (Bharat Heavy Electricals Ltd. 44 ). As Section 9(1) of the CST Act confers power on the assessing authorities of the State, from where the goods commence movement, to levy tax under Section 3(a) of the CST Act, and the respondents are the authorities of the State where the goods have been delivered, they lack jurisdiction to levy tax on the petitioners even under Section 3(a) of the CST Act. V. SECTION 5(2) OF THE CST ACT (i) HIGH-SEA SALES:- It is contended, on behalf of the petitioners, that it is the owner who secured release of the goods from the carrier, and filed the bill of entry for the imported goods; as the name of the owner is reflected in the bill of entry, it is evident that it is he who imported the goods; accepting the submission of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and customs authorities shall have the same meaning as in the Customs Act, 1962. In Union of India v. Sampat Raj Dugar (1992) 2 SCC 66, the Supreme Court held that, if the definition of importer' in Section 2(26) of the Customs Act were kept aside, a person who did not pay for, and receive the documents of title, did not become the owner of the goods; the definition of importer', in Section 2(26) of the Customs Act, was not relevant to the question of title; it only defined the expression importer'; the idea is to hold the licensee responsible for anything and everything that happens from the time of import till they are cleared through Customs, whether or not he is the owner of such goods in law; ownership of the imported goods cannot be attributed to the importer even in a case where he abandons them, i.e. in a situation where he does not pay for and receive the documents of title; holding otherwise would place the exporter in a very difficult position; he would loose the goods without receiving payment, and his only remedy would be to sue the importer for the price of goods, and for such damage as he may have suffered; and this would not be conducive to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed does not cease to be the importer. In other words, the person who has secured the release of the goods from the carrier, who has filed the bill of entry, and who has undertaken the work of clearance, continues to be an importer. (M/s. Vellanki Frame Works, Visakhapatnam v. The Commercial Tax Officer, Chinawaltair Circle, Visakhapatnam 2015-VIL-14-AP= Judgment in W.P.Nos. 4552 and 6258 of 2013, dated 18.12.2014). If the name of the Owner is reflected in the bill of entry as the importer of the goods, it would be difficult to accept the submission of the revenue that, notwithstanding the Owner being the importer of the goods, the title to the goods continued to remain with the contractor. The person, whose name is reflected in the bill of entry, is assessed to customs duty under the Customs Act. While the importer of the goods can also be an agent of the owner of the goods such a presumption, in the present batch of Writ Petitions, would be incongruous as that would mean that the person, shown as the importer of the goods in the bill of entry, has acted as the agent of the contractor in importing the goods only for the contractor to sell the goods to him later. While t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. It is unnecessary for us to delve on this aspect any further as the respondents cannot subject the petitioners to tax, under the A.P. VAT Act, even if the import of the goods, under the subject contracts, fall within the ambit of the first limb of Section 5(2) of the CST Act. That some of the petitioners have contended that these are high sea sales, falling within the ambit of the second limb of Section 5(2) of the CST Act, would not disable them from contending that the subject imports fall within the first limb of Section 5(2) as, in either event of an import falling within the first or the second limb of Section 5(2) of the CST Act, the respondents lack jurisdiction to levy tax on such sales under the provisions of the A.P. VAT Act. (ii) SALES WHICH OCCASION IMPORT:- It is contended by Sri S.Ravi, Learned Senior Counsel, that some of the goods for the turnkey project were imported by Alstrom Projects from Indonesia under Chapter 98 of the Customs Tariff Act after the owner had obtained prior approval from the Government of Andhra Pradesh; the State Government gave a letter to the Commissioner of Customs, Kakinada to allow import under the Project Import Regulations; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel, would submit that inconsistent and mutually destructive pleas have been taken; an import sale, under Section 5(2), can only happen in two ways; (i) the sale or purchase occasions import; (ii) the sale is effected by transfer of documents of title to the goods before the goods have crossed the customs frontier of India i.e. high sea sale; [c] like a Section 3(a) and a Section 3(b) sale, there are two mutually exclusive categories under Section 5(2), and one cannot fall within the other; the import sale should either be a high sea sale or a sale occasioning import; in a high sea sale, the transfer of title to the goods must have happened before the goods have crossed the customs frontier of India ; there is no high sea sale as the supply contracts clearly show that title has passed only in India; the Project Import Regulations require the employer's name to be mentioned in the import documents so as to ensure that the goods are actually being used for the specified power project; neither the said Regulations, nor the documents, demonstrate that the owner becomes the importer; Alstom's claim that it is a sale occasioning import, under Section 5(2), is not tenable becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director-General of Supplies; there was no possibility of these goods being diverted by the assessee for any other purpose; and, consequently, the sale took place in the course of import of goods within Section 5(2) of the Act and were, therefore, exempt from taxation. In answer to the contention, that the decision of the Constitution Bench of the Supreme Court in K.G. Khosla (I) 177 had not been correctly decided and should be referred to a larger Bench, the Supreme Court, inIndure 75 , opined that K.G. Khosla (I) 177 had held the field for more than three decades; and its correctness has not been doubted so far. In Coffee Board (I) 175 , the Supreme Court held that three essentials are required to be met before the sale can be said to be in the course of import, (i) there must be a sale; (ii) the goods must actually be imported; and (iii) the sale must be a part and parcel of the import; if there are two independent sales, the link between the imported goods and their actual delivery to their actual users would be broken; and the integrated course of import would then be found wanting. In Binani Bros. (P) Ltd.176, the Supreme Court held that the movement of goods was occasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement or order under which the goods are to be exported and (b) it must be for the purpose of complying with such agreement or order; and it is only then that such penultimate sale is deemed to be a sale in the course of export. In Indian Explosives Ltd.226, the Supreme Court held that Binani Bros.176 was clearly distinguishable on two material aspects; in that case the assessee itself held the import licence and the goods were imported on the strength of such import licence, and not on the strength of any actual users licence; secondly, there was no term or condition prohibiting diversion of the goods after the import; it is these two factors which establish the integral connection or inextricable link between the transactions of sale and the actual import making the sales in the course of import; and, if the movement of the goods from the foreign country to India was in pursuance of the requirements flowing from the contract of sale between the - assessee and the local purchaser, the sale in question must be held to be in the course of import. In K. Gopinathan Nair 179 the Supreme Court held that any purchase of goods imported by a canalising agency, which is the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CI, and not the local user; and the Supreme Court had held that the principles evolved by it, in para 12 of the judgment, were not applicable to that case. This Court is bound by the law declared by the Supreme Court inIndure 75 , and the submission of Sri K. Vivek Reddy, Learned Special Counsel, that, notwithstanding the aforesaid observations inIndure 75 , the earlier judgments of the Supreme Court in Binani Bros.176;Mohd Serajuddin 174 andK. Gopinathan Nair 179 should be followed, necessitates rejection. Sri K. Vivek Reddy, Learned Special Counsel, would submit that, as Parliament introduced Section 5(3) to overcome the basis of the judgment of the Supreme Court in Mohd. Serajuddin 174 construing the scope of Section 5(1), the law declared by the Supreme Court, in Mohd. Serajuddin 174 , would continue to govern the scope of Section 5(2). This submission is based on certain observations in the judgment of the Supreme Court in K. Gopinathan Nair 179 . As the Supreme Court inIndure75 noticed its earlier judgments, including K. Gopinathan Nair 179 , and followed K.G. Khosla (I) 177 , this Court is bound by the law declared by the Supreme Court inIndure 75 and K. G. Khosla (I) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort; in order that the sale should be one in the course of import it must occasion the import; in order to occasion the import there must be an integral connection or an inextricable link between the first sale following the import, and the actual import provided by an obligation to import arising from the statute, contract or mutual understanding or the nature of the transaction which links the sale to import which cannot, without committing a breach of the statute or contract or mutual understanding, be snapped; the appellant had, admittedly, imported the goods into India for completion of the Project, on a turnkey basis, for the NTPC; it was not the respondents'case that the pipes so imported were not necessary components for the erection and commissioning of the plant; admittedly, the said pipes were used as components in the ash handling plant in the same condition as they were imported without altering its originality; such an import would fall within the constitutional umbrella; the appellant had, admittedly, imported the goods into India for completion of the Project of NTPC on a turnkey basis; and thus, by virtue of Article 286(1)(b) of the Constitution, it would not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise for consideration therein are concerned. There is no provision either under the A.P. VAT Act or under the Writ Proceedings Rules which enable the petitioners to simultaneously invoke the jurisdiction of the High Court and the statutory appellate authorities against the very same assessment/revisional orders, albeiton different grounds. That would, however, not justify this Court taking upon itself the task of examining all the issues, which arise for consideration from the impugned orders, merely because the Writ Petitions were entertained on the plea that a part of the assessment/revisional orders suffered from a jurisdictional error. All the Learned Senior Counsel, and the Learned Counsel, appearing on behalf of the petitioners would submit that, since the petitioners have confined their submissions only with reference to Sections 3 to 6 of the CST Act, and the Writ Petitions were admitted only on this score, they should be permitted to contest all other issues by way of statutory appeals under the AP VAT Act. The Learned Advocate General for the State of Telangana, Sri K. Vivek Reddy, Learned Special Counsel and Sri S. Suribabu, Learned Special Standing Counsel for Commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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