9911796707
TMI Blog2025 (1) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... e branch transfer. In this connection reference can be made to the judgment of the Supreme Court in Tata Engineering Locomotive [ 1970 (3) TMI 104 - SUPREME COURT] , wherein it was held that ' It has been suggested that all the transactions were of similar nature and the appellant s representative had himself submitted that a specimen transaction alone need be examined. In our judgment this was a wholly wrong procedure to follow and the Assistant Commissioner, on whom the duty lay of assessing the tax in accordance with law, was bound to examine each individual transaction and then decide whether it constituted an inter-state sale exigible to tax under the provisions of the Act.' Conclusion - The State Tribunal had meticulously examined the decisions and the factual position and has, therefore, considered it appropriate to remand the matter to the Assessing Officer to verify the lorry receipts/dispatch proof in respect of each of the transactions. There is, therefore, no infirmity in order passed by the State Tribunal. Appeal dismissed. - HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT AND HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) APPEARANCE : For the Appellant: M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment orders disallowed the stock transfer claims mainly on the following: (a) Maintenance material for consumption in Annual Maintenance Contract; (b) Consumables for printing and card personalization; (c) Trading/resale of servers and computers; and (d) Trading/resale of printers and networking items. (v) Thus, CMS Computers was assessed for the period from 2005-2006 to 2010-2011 under the CST Act; 4. Against the above disallowance of branch transfers, CMS Computers filed appeals before the State Tribunal under section 18A of the CST Act. The State Tribunal, by a common order dated 22.09.2016, allowed the appeals in respect of two categories of transaction and in respect of the third category of transaction remanded the matter to the Assessing Officer for re-determination of stock transfer in the light of the directions given in the order. 5. The stock transfer claims of CMS Computers which were allowed and which were remanded by the State Tribunal are as follows: S.No. Disallowance of stock transfer by the Deputy Commissioner under following heads Turnover of six years (in Rs.) Decision of the State Tribunal Reason for allowing/remanding claim of stock transfer 1. Maintenance ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware items for the year 2008-09 This agreement is made for Annual Maintenance Contract for all LIC offices throughout India between the Life Insurance Corporation of India, Central Office, IT Department, JEEVAN SEVA ANNEXE, S.V. ROAD SANTACRUZ (W), MUMBAI 400 054, hereinafter referred to as LIC, the customer of one Part and CMS COMPUTERS LIMITED , a Company incorporated under the Companies Act, 1956 and having its registered office at 201, Arcadia, Nariman Point, Mumbai 400 021, hereinafter referred to as Vendor which expression shall include its assigns and successors of the second Part. TERMS AND CONDITIONS OF THE AMC 2008-2009 I. Nature of AMC (1) ***** (2) ***** (3) ***** (4) The vendor has to carry out on-site comprehensive maintenance of the Computer Systems excluding LCD Projectors (Systems include Servers PC s, Thin Clients, all printers including Line Printers and Laserjet Printers, Inkjet Printers, MFPs DMPs, Scanners, Laptops, Switches and all other peripherals) (5) All the tools, test equipments and fixtures etc. (if any) required for the on-site comprehensive maintenance of equipments, shall be provided by the AMC Vendor. (6) During the AMC period, the Vendor will be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvers, PCs, Thin Clients, all printers including Line Printers, Laserjet Printers, Inkjet Printers, MFPs DMPs, Scanners, Laptops, Switches and other peripherals and other peripherals. Software Cost if mentioned separately, Taxes, Octroi etc are not to be included in the cost while calculating the AMC. 2. If LIC opts for a third party vendor, the AMC will be payable @ 8% of hardware cost of the systems. The hardware cost will be taken at the basic price approved by Central Office subject to all the other conditions stated in this Contract. 3. Quarterly Maintenance Charges (QMC) will be paid by the respective Zones/Divisions after the expiry of each quarter. 4. The Vendors are required to submit Invoices along with the PM reports to the respective Divisional, Zonal, Central Office for claiming the QMC payable. 5. The maintenance charges for equipment coming out of warranty during the validity of the AMC will be on pro-rata basis. 6. For claiming the quarterly maintenance charges (QMC) the vendor should submit Preventive Maintenance (PM) reports for individual machines (as per Annexure-A ). It is mandatory that both the service engineer as well as the user should complete and sign the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself. Hence the remark of the Assessing Officer in the assessment order regarding AMC the details of purchase order placed by the customer is also submitted by the dealer and appears on most of the stock transfer notes is not understood as there is no separate agreement for purchase of parts, it will be outside AMC which should be decided as normal sale and purchases. Apart from AMC agreement, no such purchase order and corresponding dispatches have been pointed out by the department. The condition of maintaining adequate inventory and such inventory being notified to the customer is contrary to the premise that movement of goods as a result of agreement moves from the Appellant H.O. 17. In English Electrical, South India Viscose, Hyderabad Engineering cases relied on the Assessing Officer, there was an agreement to sell. Here there is no agreement to sell and it is not certain if the sale will take place in future and if so, of what part. The goods are standard components, much less tailor made as in case of Sahaney Steel and K.G. Khosala cited above. Even if some goods are supplied as a result of AMC agreement, there is no covenant that goods will move from other State and eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the stock transfer notes may have the names of the customers, but this is for the internal purpose only. In support of this contention learned counsel placed reliance upon the decision of the Supreme Court in Tata Engineering Locomotive Co Limited vs. Assistant Commissioner of Commercial Taxes and another (1970) 1 SCC 622; and (iii) The findings recorded by the State Tribunal are based on a correct reading of the Annual Maintenance Contract and the stock transfer notes and do not suffer from any infirmity. 13. The submissions advanced by the learned counsel for the State of Maharashtra and the learned counsel for CMS Computers on this issue have been considered. 14. The issue involved in all these appeals relates to the demand of central sales tax on the movement of goods i.e. consumables from the head office of CMS Computers situated in the State of Maharashtra to the branches in other States. According to the State of Maharashtra, the movement of goods is on account of inter-state supply of goods, while according to CMS Computers, the movement of goods is on account of inter-state stock transfer. 15. To appreciate the issue that has been raised, it would be appropriate to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract of sale. 18. 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 wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, the movement of spares from the State of Maharashtra to other States is not pursuant to the Annual Maintenance Contract, nor is the movement of goods an incidence of the Annual Maintenance Contract. Some of the stock transfer notes may have the names of the customers, but that is only for internal purposes. If standard goods are continuously and in a routine manner transferred to a branch situated in other States, irrespective of any particular order received by the branch, then such transactions have to be treated as branch transfer transactions. 20. In this connection, reference can be made to the decision of the Supreme Court in Tata Engineering Locomotive . The appellant was carrying out business of manufacturing trucks at Jamshedpur in the State of Bihar. The appellant maintained stockyard in different States for the purpose of more effective distribution of the vehicles to the dealers. The sale of the vehicles to the dealers was affected as well as to other users in different States from the stockyards. An issue arose as to whether sale took place in different States where the stockyards were situated. The Supreme Court noticed that the sales office of the appellant in B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the delivery State and such person's activities prior to or after the implementation of the contract may not alter the position. 17. The steps taken from the beginning to the end by the Bombay branch in coordination with the Madras factory show that the Bombay branch was merely acting as the intermediary between the Madras factory and the buyer and that it was the Madras factory which pursuant to the covenant in the contract of sale caused the movement of the goods from Madras to Bombay. The inter-State movement of the goods was a result of the contract of sale and the fact that the contract emanated from correspondence which passed between the Bombay branch and the company could not make any difference. (emphasis supplied) 23. The aforesaid decision of the Supreme Court in English Electric would not come to the aid of the State of Maharashtra. It is seen that the Bombay buyer wrote to the Bombay branch of the appellant asking for lowest quotation. The factory of the appellant was situated in Madras. The buyers order was sent by the Bombay branch to the Madras branch, which quoted the price FOR Madras. The Bombay branch then wrote to the Bombay buyer quoting the FOR Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption under Section 3(a) and/or to show that there has been a sale or purchase of goods in the course of inter-State trade or commerce and if the assessee disputes that there has been a sale or purchase of goods in the course of inter-State trade or commerce, then 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. ***** 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 fact that there were prior contracts between Usha Sales Ltd. and the assessee and in pursuance of those contracts, the goods moved from the assessee s factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o its godowns never tallied with the allocations letter sent by UIL. Therefore, such allocations letter cannot be construed as firm orders . Therefore, the transactions cannot be brought within the purview of inter-State trade or commerce to attract charging provisions under the Central Act. 50. In our view, though the ultimate purchaser UIL placed orders for a particular quantity of goods to be supplied, the assessee did not supply the actual quantity indented for. We do not, however, think that this makes any difference to the application of Section 3(a) of the Central Act. In our view, it does not matter how much goods were delivered to the branch office which just acted as a conduit pipe before it ultimately reached the purchaser s hands. All that matters is that movement of the goods is in pursuance of the contract of sale or as necessary incident to the sale itself. Further, the sales agreement is for a period of five years. If there is short supply of the goods than what was indented for, then the same could be adjusted in the subsequent dispatch. Therefore, to contend that there was no firm order placed by UIL with the assessee and accordingly, it would not come within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uters was required to maintain inventory at branch level on the basis of the consumption in the corresponding quarter of the previous year and there is no clause in the contract that spare parts that are replaced have to be invoiced separately and they are covered by the Annual Maintenance Contract. The State Tribunal also found that the goods were standard components and were not tailor made for the customers. 33. There is, in view of the aforesaid discussion, no infirmity in the findings recorded by the State Tribunal on this issue. B Printing and Card Personalization 34. The State Tribunal examined the Agreement executed between Development Credit Bank Ltd., and CMS Computers and the relevant portions of the Agreement are reproduced below: THIS AGREEMENT is made and entered into at Mumbai this 1st day of June, 2005, BETWEEN DEVELOPMENT CREDIT BANK LTD., a Joint Stock Corporate Office at 154, S.V.P. Road, Dongri, Mumbai - 400 009 and having its Central Administrative Office at 204, Raheja Centre, Nariman Point, Mumbai - 400 021 (hereinafter referred to as the Bank ) (which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in a set format. b. Run the said CD / CDs on set pre-processing programs in place on Systems at The Company s Office, view the images and match the lists generated against the total number of customers made available. c. Generate the Print-outs of the respective Statements of Accounts / Certificates, latest by the end of the 3rd day from the date on which the Company has been provided the information in floppy / CD / electronic media, from The Bank s ITD and keep ready all deliverables as may be required to be handed over to the stuffing / courier agency specifically designated by the Bank for the purpose. 3. The Bank shall pay to the Company, appropriate charges for services rendered as per Annexure- II attached hereto. The Bank shall pay the said amount to the Company within ten days of submission of the bill to the bank of the services rendered in the previous month along with proper proof of the quantum of the Statements of Accounts generated. It is hereby agreed that the Bank will pay no additional charges in the event of the company being required to take up any additional work for completion of the task enumerated above. 4. The company shall perform the services in a comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eached between them concerning the provision of the Services. NOW IN CONSIDERATION OF THE PREMISES AND THE RESPECTIVE AGREEMENTS THE PARTIES HERETO AGREE AS FOLLOWS DUTIES AND OBLIGATIONS OF YOU TELECOM 1. You Telecom will deliver the data in CD to CMS print shop at Mhape, Navi Mumbai. 2. You Telecom will collect the printed material from CMS print shop at Mhape, Navi Mumbai. 3. You Telecom will provide the data in the text or any other format on mutual consent. 4. You Telecom will make the payment within 15 days from the date Invoice submitted. 5. You Telecom will give advance notice of 15 days for any changes in the print format. 6. You Telecom will give prior notice of 60 days for any change in Pre-printed stationery. DUTIES AND OBLIGATIONS OF CMS COMPUTERS LTD. 1. CMS shall print the monthly Bills and other print jobs in a manner and fashion as set or as per instructions given to them by You Telecom from time to time. 2. CMS shall upon receipt of the Data from You Telecom proceed to deal with the Data as set and complete the printing work. 3. CMS shall ensure that there are no discrepancies in the process of printing the Data as received from You Telecom and shall maintain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin 36 hrs, as stapling is a manual process. CONSIDERATION As consideration for the services rendered by CMS under this agreement, You Telecom shall pay to CMS as follows: For every A4 image that is printed by CMS ( 0.44 Paise), Cost of pre-printed stationery ( 0.05 Paise per colour), Cost of plain stationery 80gsm ( 0.45 paise / A4) and manual Stuffing 1 @ 0.25 paise per envelope, Cost of envelope in one colour C-6 @0.58 paise All taxes extra as applicable of the said financial year. A sum stated in the Cost Structure. (emphasis supplied) 36. The relevant portions of the finding of the State Tribunal in respect of printing and card personalization are as follows: 23. Printing of account statement or personalization of cards as per data provided by the customer in this case would be a works contract and fits into the observations made by Hon ble Apex Court in Anandan Vishwanathan 73 STC 1 (SC) ***** Here printing is done for the data supplied by the client. Once the printed, the property does not remain that of Appellant. There are confidentiality clauses in the agreement about data so provided by the client and once printed, the printed material is only for client and is not a mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the State of execution of works contract. 31. Viewed in this light, if we see the printing agreement produced before us, it is seen that the customer is not concerned about how or from where the goods are procured so long as he gets the printed material as on required sized and quality of paper. Even if the dispatches from Appellant are marked for use in contract for a particular customer, it is an internal matter between the Appellant and the branch, as mere paper or ink is not sold to the customer. 32. We are therefore unable to uphold the conclusion of the Assessing Authority that there is interstate sale of paper, ink and toner in printing contract executed by the Appellant outside the State. (emphasis supplied) 37. Learned counsel for the State of Maharashtra submitted that CMS Computers has its own printing machines and data card personalization machines at different places. It undertakes the job of bill printing and preparing debit cards and credit cards and for this purpose it is centrally purchasing all consumable items from the State of Maharashtra and sending them to the depots or at the client offices in other States. The consumables are transferred as and when requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be procured by the appellant and the appellant is under no obligation to move the goods from the State of Maharashtra to the place where printing is done. In fact, being standard goods, they can be procured from any place. 41. The findings recorded by the State Tribunal are in conformity with the two Agreements referred to above. The two Agreements do not place an obligation upon CMS Computers for transfer of the consumables only from the State of Maharashtra to the branches offices of CMS Computers in other States and it is open to CMS Computers to purchase these standard items from any place, whether it be in the State of Maharashtra or in a State where the branch offices are situated. 42. Learned counsel for the State of Maharashtra has placed reliance upon the judgment of the Supreme Court in Durga Projects . This judgment lays down that it is open to the State legislature to provide uniform rates of tax on goods involved in the execution of works contract. 43. What has to be seen in the present case is whether the movement of consumables from the State of Maharashtra to the branch offices of CMS Computers in other States is as a result of the two Agreements. This can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2005-2006 and ITC 28/2005-2006 c) Pg 575 to 587 Stock transfer invoice TT5001062 dated 20.8.2005 to New Delhi branch for Rs. 78,47,935.90 and Rs. 5,46,217/-. Pg. 589 to 605 Invoices raised by Delhi branch on National Information Centre, invoice No. VD/5000559/24.8.2005 for Rs. 61,28,143.81/- which contain mostly the items transferred above. 48. These are sample documents that have been cited. From (a) and (c), it is seen that the goods supplied are not merely standard goods but is a whole configuration of a system with specialized requirement of computer and its compatible parts and peripherals and the amount is considerable. These sample documents belie the averment of the Appellant that goods transferred to branches are merely standard goods namely computers and peripherals. A high end computer or a whole system with compatible parts to meet the requirement of an institutional purchaser will not be standard goods particularly when these machines are imported and not available off the shelf. 49. In (b) large amount of supplies are made to institutional buyer like State Bank of India mainly against two purchase orders. 50. Where specific items such as entire configured system as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as lorry receipts/dispatch proof to determine whether the movement was against any pre-existing order and then to re-determine the allowability of stock transfer. 48. Learned counsel for the State of Maharashtra submitted that the Assessing Officer had rightly held the transaction to be inter-state sale where orders were placed on the dealer in the State of Maharashtra and subsequent dispatches to branches in other States was only to handover the goods to the customer. Learned counsel also submitted that the goods were sent as per specifications and, therefore, they are on the basis of pre-determined orders. 49. Learned counsel appearing for CMS Computers, however, contended that the State Tribunal committed no error in remanding the matter to the Assessing Officer to examine this issue in the light of the observations made in the order. 50. The submissions advanced by the learned counsel for the State of Maharashtra and the learned counsel appearing for CMS Computers on this issue have been considered. 51. It is seen that the Assessing Officer has not provided any specific finding and had given a general finding that there were pre-existing orders for movement of goods. Mere ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
