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TMI Blog2024 (4) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... to another is a result of a prior contract of sale. Under section 6A, if the dealer claims that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business and not by reason of sale, then the burden of proving that the movement of goods was so occasioned shall be on the dealer. The mode of discharge of this burden of proof has also been provided in the form of a declaration in form F . However, if the department does not take advantage of the presumption under section 3(a), but shows a positive case of sale in the course of trade or commerce to make it liable to tax under section 6, the declaration in form F under section 6A would be of no avail. When the sale or agreement to sell causes or has the effect of occasioning the movement of goods from one State to another, irrespective of whether the movement of goods is provided for in the contract of sale or not, or whether the order is placed with any branch office or any head office which resulted in the movement of goods, if the effect of such a sale is to have the movement of goods from one State to another, an inter-State sale would ensue and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2012 passed by the Deputy Commissioner of Sales Tax (Large Taxpayer s Unit-E-605, Mumbai) [ the Deputy Commissioner] rejecting branch transfer claim of M/s. Beardsell Limited [ the respondent] has been set aside to the extent of Rs. 1,56,38,695/- and consequently the order levying tax and interest has also been set aside. 2. The respondent is a limited company engaged in the business of manufacture of structural insulated sandwich panel systems. It has a manufacturing unit at Navi Mumbai, and branches at Ahmedabad, Delhi, Coimbatore, Bangalore, Chennai, Cochin, Hyderabad and Visakhapatnam. 3. The assessing officer initiated assessment proceedings against the respondent by issuing a notice in Form VII B for the period from 01.04.2005 to 31.03.2006 under the Central Sales Tax Act, 1956 [the CST Act] in respect of the goods that had moved from the manufacturing unit at Navi Mumbai to the branches in other States and an assessment order was passed on 29.02.2012 raising a demand of Rs. 94,25,134/- for the reason that the claim of the respondent that it was a case of branch transfer was not correct. In arriving at a conclusion that the movement of the goods from the factory of the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal is the last fact finding body, the facts discussed in details in the judgment cannot be changed or deviated from. It has also been contended that the burden to prove that the movement of goods to various branches were in pursuance of preexisting contract of sale/orders is on the department. In this regard it is pointed out that the dealer has himself submitted before the Hon ble Tribunal that, the customers requiring buildings such as shelters, cold storage, portable cabins, warehouse etc. approach the branch offices. The site engineers visit the site and understand the specifications and requirements of the customers. The customer places an order on the dealer specifying the dimensions of the building required by them. Thereafter, the engineers of the dealer prepare detailed specifications for the whole building in terms of length, width and height of the structure (such as the walls, roofs, floors, windows, doors) and number of panels required etc. The engineers thereafter place dispatch instructions to the factory. It is therefore crystal clear from the dealer s own submission before the Hon ble Tribunal that the branch transfers are affected as a result of preexisting order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the judgment of the assessing officer was based on pre-supposed information, that all the transactions of the branch transfers are decided by the judgment given by the Custom Central Excise and Service Tax Appellate Tribunal in the case of Commissioner of Central Excise and Customs, Guntur vs. P.M.G. Structurals Pvt. Ltd. 2010 (250) E.L.T. 113 (Tribunal Bangalore) Counsel for the appellant has pointed out that interstate sales were determined at Rs. 8,05,65,192/-, for which tax was collected and paid. It was pointed out that branch transfers to offices outside the State of Maharashtra was shown at Rs. 2,09,60,154/-. Therefore, the dispute is only with regard to this amount of Rs. 2,09,60,154/- . Appellant has contended that each and every transactions are required to be looked into as per the Supreme Court judgment in the case of Tata Engineering and Locomotive Ltd. vs. Assistant Commissioner of Commercial Tax reported in (1970) 26 STC 354. ***** Hence, he contended that assessing authority has to examine each and every transaction. However, assessing authority looked into three transactions worth Rs. 53,21,459/- and applied the ratio to all the other transfers. It was, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent at Navi Mumbai to its branches at Ahmedabad, Delhi, Coimbatore, Bangalore, Chennai, Cochin, Hyderabad and Visakhapatnam was occasioned by pre-existing orders placed by the customers at the branch offices of the respondent. Learned counsel submitted that the respondent cannot be permitted to take a different stand on the same issue before different authorities. In this connection, learned counsel placed reliance upon the decision of the Madras High Court in Yousuff Radio vs. The Board of Revenue, Commercial Taxes, Chepauk, Madras-5 [(1979) 43 STC 525] . To support the contention that the movement of the goods from the State of Maharashtra to other State was occasioned because of pre-existing orders, learned counsel placed reliance upon the decisions of the Supreme Court in Ashok Leyland Ltd. vs. State of T.N. and another [(2004) 3 SCC] and Hyderabad Engineering Industries vs. State of Andhra Pradesh [(2011) 4 SCC 705]. 8. Shri N.V. Tapare, learned counsel for the respondent, assisted by Sandeep D. Ghaterao, however, supported the impugned order and submitted that it does not call for any interference. Learned counsel submitted that the Deputy Commissioner was not just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this Act, in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be, and not by reason of sale, the burden of proving that the movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of despatch of such goods and if the dealer fails to furnish such declaration, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of sale. (2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee can rebut the presumption by filing declaration in form F under Section 6A of the Central Act to prove that the movement of goods was occasioned not by reason of sale but otherwise than by way of sale. When the department does not take advantage of the presumption under Section 3(a) of the Central Act, but shows a positive case of inter-State sale in the course of inter-State trade or commerce to make it liable to tax under Section 6, the declaration in Form F under section 6A would be of no avail. 23. It is an accepted position in law that a mere transfer of goods from a head office to a branch office or an inter-branch transfer of goods, which are broadly brought under the phrase Branch transfers cannot be regarded as sales in the course of inter-State trade, for the simple reason that a head office or branch cannot be treated as having traded with itself or sold articles to itself by means of these stock transfers. 24. In the instant case, the case of the Revenue is not only based on the agreement of sale but also on the presumption under Section 3(a) of the Central Act. 25. In the instant case, the assessing authority and the Tribunal have recorded a finding of fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no avail. Mere transfer of goods from a head office to a branch office or inter-branch transfer of goods which broadly come under the phrase branch transfers cannot be regarded as sale in the course of inter-State trade for the simple reason that a head office or branch cannot be treated as having traded with itself or sold articles to itself by means of stock transfers. A contract of sale of goods would be effective when a seller agrees to transfer the property in goods to the buyer for a price and that such a contract may be either absolute or conditional. If the transfer is in presenti, it is called a sale ; but if the transfer is to take place at a future time and subject to some conditions to be fulfilled subsequently, the contract is called an agreement to sell . When the time in the agreement to sell lapses or the conditions therein subject to which the property in goods is to be transferred are fulfilled, the agreement to sell becomes a sale . When the sale or agreement to sell causes or has the effect of occasioning the movement of goods from one State to another, irrespective of whether the movement of goods is provided for in the contract of sale or not, or whether the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her place of business or his agent or principal. Such declaration would contain the prescribed particulars in the prescribed form obtained from the prescribed authority. Along with such declaration, the dealer is required to furnish the evidence of such dispatch of goods by reason of Act 20 of 2002. In the event, if it fails to furnish such declaration, by reason of legal fiction, such movement of goods would be deemed for all purposes of the said Act to have occasioned as a result of sale. Such declaration indisputably is to be filed in Form F. ***** 45. When the dealer furnishes the original of Form F to its assessing authority, an enquiry is required to be held. Such enquiry is held by the assessing authority himself. He may pass an order on such declaration before the assessment or along with the assessment. Once an order in terms of Sub-Section 2 of Section 6-A of Central Act is passed, the transactions involved therein would go out of the purview of the Central Act . In other words, in relation to such transactions, a finding is arrived at that they are not subjected to the provisions of the Central Sales Tax. It is not in dispute thereunder no appeal is provided there agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efer to the facts of the present appeal. 16. The respondent is a manufacturing unit at Navi Mumbai in the State of Maharashtra and has branches at Ahmedabad, Delhi, Coimbatore, Bangalore, Chennai, Cochin, Hyderabad and Visakhapatnam. The issue that arises for consideration is whether the movement of the goods from the factory of the respondent at Navi Mumbai to its branches in other States was as a result of pre-existing orders placed by the customers at the branch offices of the respondent or was merely a branch transfer as claimed by the respondent. The assessing officer, in the order dated 29.02.2012, relied upon the decision dated 05.08.2005 rendered by CESTAT in the case of the respondent wherein a finding was recorded that the movement of goods from the factory at Navi Mumbai to the branches of the respondent in other States was as a result of pre-existing orders placed by the customers at the branch offices. The assessing officer held that it was not open to the respondent to take one plea before CESTAT and a contrary plea before the authority. The assessing officer, therefore, concluded that the branch transfer had not taken place and it was an inter-State sale. 17. The res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shelters, garages etc. are generally designed with multiples of 1.18 metres as width); and (ii) Thickness varies between 50 mm to 300 mm; and (iii) Are supplied in exact numbers with predetermined dimensions for assembly of them together into walls, ceiling, floors, etc. with the channels (of the same materials as of the panels) supplied along with the panels; and (iv) Not altered to any other size at the site. 2.3 (a) Details of correct dimensions of panels, roofing, flashing etc. required for assembly of buildings at site by the appellants engineers at site determined. Panels are made of the predetermined thickness and length and in numbers in the machine itself . The required roof panels are also made ready in the machine. The doors and windows, wherever required are made ready in the factory workshop. Thereafter panels for roof, walls, doors, and windows along with required flashing i.e. ancillaries such as channels, corner angles are dispatched in the vehicle for assembly at the site. As the panels are in completely knocked down condition, assembly of the panels at the site is very easy. Panels for floor (wherever required) wall, roof, windows, doors and ancillaries such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factory by the engineers. The appellant then dispatches the materials of exact dimension so that when they are assembled at the site, a building as desired by the customer emerges. The Supreme Court in Hyderabad Engineering held that when the sale has the effect of occasioning the movement of goods from one State to another irrespective of whether the movement of goods is provided for in the contract of sale or not or whether the order is placed with any branch office or head office which resulted in movement of goods, it would be a case of inter-State sale resulting in exigibility of tax under section 3A of the CST Act. 21. In Ashok Leyland, the Supreme Court held that where the purchaser places an order for manufacture of goods as per his specification, a presumption can be raised that agreement to sell had been entered into. 22. In this connection, it would also be pertinent to refer the decision of the Supreme Court in English Electric Company of India Ltd. Vs. The Deputy Commercial Tax Officer and others [(1976) 4 Supreme Court Cases 460] wherein it was held: 16. When a branch of a company forward a buyer's, order to the principal factory of the company and instructs th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were finalised in the instant case at Delhi and specific goods were manufactured at Faridabad in pursuance of those contracts. Those were future goods within the meaning of section 2(6) of the Sale of Goods Act, 1930. After the goods were manufactured to agreed specifications, they were despatched to the head office at Delhi for being forwarded to the respective customers at whose instance and pursuant to the contracts with whom the goods were manufactured. The goods could as well have been despatched to the respective customers directly from the factory but they were sent in the first instance to Delhi as a matter of convenience, since there are better godown and rail facilities at Delhi as compared with Faridabad. The despatch of the goods of Delhi was but a convenient mode of securing the performance of contracts made at Delhi. Goods conforming to agreed specifications having been manufactured at Faridabad, the contracts of sale could be performed by respondent 1 only by the movement of the goods from Faridabad with the intention of delivering them to the purchasers. Thus, the movement of goods was occasioned from Faridabad to Delhi as a result or incident of the contracts of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent that in other transactions, the process had changed. What follows from the aforesaid factual position stated by the respondent before CESTAT is that the movement of the goods had occasioned from the factory of the respondent to the branch offices because of the orders placed by the customers at the branch offices of the respondent. 29. Thus, in view of the aforesaid discussion, it has to be held that the Deputy Commissioner was justified in holding that the transaction in the present case was not a case of branch transfer but of inter-State sale and MSTT committed an error in holding that except for three transactions worth Rs. 53,21,459/-, the remaining transaction would be of branch transfers. 30. In view of the provisions of section 22B(1) of the CST Act, a direction would, therefore, have to be issued to the Deputy Commissioner to ascertain whether any additional amount is required to be deposited by the respondent and if so to recover the same from the respondent. A further direction is issued to the States to transfer the refundable amount to the State of Maharashtra. 31. The appeal is, accordingly, allowed with the aforesaid directions and the order dated 26.04.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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