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TMI Blog2007 (8) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the penalty levied under Section 12-B(4) of the Karnataka Sales Act framing the questions of law which are extracted in this judgment and urging various grounds in support of the same and prayed to set aside the impugned judgment and to restore the orders of the First Appellate Authority by answering the questions of law in favour of the Revenue. 2. This Court on 21 -11 -2005 admitted this petition and framed the following questions of law, which read thus: 1. Whether there could be any subsequent sale effected by the respondent as per explanation 1 appended to Section 3(b) of the CST Act in furtherance to the ultimate buyer -KPTCL before the commencement of the movement of the goods from other State to the State of Karnataka? 2. Whether the three independent simultaneous transactions of sale effected before the commencement of movement of goods could be regarded as covered under Section 3(a) of CST Act and not under Section 3(b) of CST Act? 3. Whether the State of Karnataka which has issued "C" forms to the registered dealer is the "Appropriate State" to levy C.S.T. as per the proviso appended to Section 9(1) of the CST Act? 4. Whether the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is questioned in this revision petition by the Revenue urging various grounds in support of the questions of law that are framed in this case. 4. Questioning the correctness of the findings of the KAT referred in the impugned judgment on the contentious points framed and answered against the Revenue Smt. Sujatha, the learned A.G.A. contended that the KAT has completely ignored the contract executed by the respondent in favour of the KPTCL for supply of capacitor banks at various site locations in the Karnataka State designated by the KPTCL namely supply contract, civil contract and erection contract. The Assessing Authority has examined the terms and conditions of the supply contract and found that the transaction of the respondent with the KPTCL was an inter-State sale which falls under Section 3(a) of the CST Act. Further, it is urged that KAT has erred in not considering the relevant finding of fact recorded by the Assessing Authority that the sale of goods was completed when they were appropriated before commencement of movement of goods from the manufacturer's place to KPTCL, therefore Section 23 of the Sale of Goods Act is attracted to the case on hand. Hence the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gadhara Trading Co. Ltd. [1988]3SCR805 , and another decision of the Andhra Pradesh High Court in the case of Jadhavjee Laljee v. State of Andhra Pradesh wherein the Andhra Pradesh High Court, after considering Sections 6(2) and 9(1) of the CST Act has held that the object of the proviso to Sub-section (1) of the above provisions of CST Act has to determine or to specify the appropriate State competent to tax second or subsequent sales not falling under Section 6(2) of the CST Act. She has contended that the said decision with all fours is applicable to the case of the Revenue for the reason that Sub-section (1) to Section 9 of the CST Act was inserted by way of an amendment to the statute after the decision of the Madras High Court in the case of State of Madras v. Nandagopal Chetty (1968) 22 STC 290 and also placed reliance upon another Division Bench decision of the Madras High Court reported in Vinay Cotton Waste Company v. The State of Tamil Nadu (1986) 63 STC 391 wherein the Division Bench has interpreted clause (a) of Section 3 of CST Act and laid down the principles of law stating that the inter-State sales falls under clause (a) of Section 3 of the CST Act and also placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to the fact situation and therefore he has urged that the questions of law framed in this petition do not arise for consideration. Further he has contended that Section 23 of Sale of Goods Act relied on by the learned A.G.A. is not applicable to the fact situation and therefore he has urged that reliance placed upon the said provisions of the Act and decisions referred to supra are misplaced as they do not apply to the fact situation. 8. The learned Senior Counsel Mr. Sarangan in support of his submission has relied on the decision of the Supreme Court case of Bharatand Co. v. Trade Tax Officer and Anr. (2005)6SCC796 . Placing reliance upon the said judgment he has vehemently contended that the concurrent finding of fact recorded by the appellate authority on the basis of the lorry receipt merely goes to show that consignee's name is shown as KPTCL for delivery of goods to the KPTCL, it is submitted by the learned Sr. Counsel that the concurrent finding recorded by the Appellate Authority that the sale of goods falls under Section 3(a) of the CST Act and it is not a sale during transit, as the title of the goods were transferred in favour of the KPTCL at the commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made. (Emphasis laid by us) Sections 3(a), 6(2) and 9(1) and provisions of the CST Act read thus: 3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.- A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase. (a) occasions the movement of goods from one State to another; or (b) ...xxx...xxx... 6. Liability to tax on inter-State sales. (1) ...xxx...xxx .... (2) Notwithstanding anything contained in Sub-section (1) or Sub-section (1-A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods,- (A) to the Government, or (B) to a registered dealer other than the Government, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revised returns submitted by the respondent before the assessing authority has been examined by him with reference to the contract which was entered into between the respondent and the KPTCL for supply of aforesaid goods. The lorry receipt issued by Maruthi Road Carriers, Hyderabad, clearly mentions the name of the consignor for supply of the goods in favour of the KPTCL. The same were delivered to the KPTCL. The goods were manufactured at Chennai as per the specifications mentioned in the contract with the respondent and the goods were delivered in favour of the KPTCL by executing its contract. Therefore the sale of goods in favour of KPTCL was completed when the goods were appropriated by the KPTCL before commencement of movement of goods from the manufacturer's place namely Chennai to the KPTCL in the Karnataka State. Therefore the inter-State sale of goods of capacitor banks fall under Clause 3(a) of the CST Act is the finding recorded by the Assessing Authority in its order, which finding of fact was concurred by the First Appellate Authority by giving valid reasons on appreciation of undisputed facts and material evidence produced before the Assessing Authority. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vers sales, other than those included in clause (b), in which the movement of goods from one State to another is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State. (emphasis laid by us) Further in the above case it has observed at 667 unnumbered para 3 which reads thus: The question to which attention must then be directed is, which of the two or more States concerned with the goods sold under an inter-State sale is entitled to collect the tax under Act 74 of 1956. By Section 9, the tax payable by any dealer under the Act is to be levied and collected in the "appropriate State". The expression "appropriate State" was at the material time defined by Section 2(a) as follows: "Appropriate State" means- (i) in relation to a dealer who has one or more places of business situate in the same State, that State; (ii) in relation to a dealer who has one or more places of business situate in different States, every such State with respect to the place or places of business situate within its territory. 13. Further, the learned AGA rightly placed reliance upon the observations made at page 673 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned by the terms of the contract themselves and the sale were in inter-State sales falling within Section 3, Sub-section (a) of the Central Sales Tax Act, 1956. Alternatively, if a view were taken that the sale did not fall under Sub-section (a) of Section 3, the deliveries of goods sold were effected by the transfer of documents after the movement of the goods from Tamil Nadu to the other States had commenced and the sales could be regarded as covered under Sub-section (b) of Section 3 of the Central Sales Tax Act. This decision is referred to by the Division Bench of the Madras High Court in the case of Tractors and Farm Equipments Ltd. v. State of Tamil Nadu and Anr. 112 STC 301 (Mad) at paragraph 9, which reads thus: As we have found that the sale effected by the vendor of the assessee to the assesses was a sale occasioned the movement of goods from State to outside the State that sale was an inter-State sale under Section 3(a). Consequently, the order of the Tribunal levying tax on the second inter-State sale effected by, the assessee cannot be sustained and is, therefore, set aside. 15. It is also pertinent to refer to the observations made by the Division Bench of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a declaration. Thus, the said words would take in not only a situation where a dealer, who could have obtained such form, fails to obtain, but also covers a situation where it is not necessary for him to obtain such a declaration. Further, at page 208, observation is made with reference to Section 8(1) and 8(4) of the CST Act. The learned A.G.A. has placed strong reliance on the observation having regard to the undisputed fact that 'C' form has not been obtained by the respondent from the department of the State in respect of the sale of goods sold on the basis of contract entered by respondent in favour of KPTCL and it is stated by it that for obtaining the same it has applied to the Department, but it has not furnished to the respondent in respect of turnover of the transaction of inter-State sale of goods in favour of KPTCL, which amount is covered for sales tax and penalty amount under Section. 12-B(4) of KST Act r/w. Section 9(2) of CST Act. This factual aspect is considered by the Assessing Authority with reference to undisputed fact of delivery of goods of capacitor Banks to the KPTCL in the State of Karnataka on the basis of the terms and conditions of the contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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