2005 (1) TMI 644 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of Supreme Court judgments in similar cases.
2. Nature of transactions (whether inter-State or intra-State).
3. Classification of the appellant's office in Andhra Pradesh (branch or agency).
4. Liability of transactions to Andhra Pradesh General Sales Tax (APGST).

Issue-wise Detailed Analysis:

1. Applicability of Supreme Court Judgments:
The appellant argued that the transactions were inter-State purchases and cited the Supreme Court judgments in *Commissioner of Sales Tax, U.P. v. Bakhtawar Lal Kailash Chand Arhti* [1992] 87 STC 196 and *Co-operative Sugars (Chittur) Ltd. v. State of Tamil Nadu* [1993] 90 STC 1 to support their claim. The Supreme Court held that if goods moved from one State to another in pursuance of a sale agreement, it constituted an inter-State sale. The movement of goods and sale should be inseparably connected. The court emphasized that if the movement of goods was an incident of the sale, it amounted to an inter-State sale.

2. Nature of Transactions:
The appellant contended that the beedi leaves were directly transported from forest depots in Andhra Pradesh to their factory in Sholapur, Maharashtra, without being taken to their office in Kamareddy, Andhra Pradesh. The Commissioner, however, found that the transactions were completed within Andhra Pradesh as the delivery took place at the forest godowns. The goods were moved from the godowns at the instance of the purchaser, specifying the mode and route of transport to Maharashtra, making the transactions intra-State as per the Commissioner.

3. Classification of Appellant's Office:
The Commissioner noted that the appellant was registered as a partnership firm with its principal place of business in Kamareddy, Andhra Pradesh. The appellant had conflicting statements about whether the Kamareddy office was a branch or an agency. The Commissioner concluded that the Kamareddy office was a branch, not an agency, and the transactions were not on behalf of a non-resident principal.

4. Liability to Andhra Pradesh General Sales Tax (APGST):
The Commissioner held that the transactions were taxable under the APGST Act, 1957, as the delivery of goods took place in Andhra Pradesh. The appellant's claim for exemption was disallowed, and the transactions were deemed intra-State purchases. However, the High Court found that the goods were purchased with the intention of immediate transport to Maharashtra, and the movement was implicit in the purchase agreement. The transport permits specified the destination and route, indicating the transactions were inter-State.

Conclusion:
The High Court allowed the appeal, holding that the transactions were inter-State sales and not liable to Andhra Pradesh General Sales Tax for the year 1989-90. The court emphasized that the movement of goods from Andhra Pradesh to Maharashtra was an integral part of the sale agreement, making it an inter-State sale. The appeal was allowed, and the appellant was not exigible to tax under the APGST Act for the relevant period.