TMI Blog2007 (11) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... as delivered by A.K. MATHUR J. Leave granted. This appeal is directed against the order passed by the Division Bench of the Orissa High Court dated April 11, 2006 whereby the High Court has reversed the finding of the Orissa Sales Tax Tribunal. Brief facts which are necessary for disposal of this appeal are that the assessment under the Central Sales Tax Act, 1956 for the years 1976-77, 1977-78 to 1983-84, 1989-90 and 1990-91 was made in respect of the assessee, M/s. IDL Industries (formerly IDL Chemicals Ltd.), a company under the Indian Companies Act having its registered office at Kukatpalli, Andhra Pradesh engaged in manufacturing explosive, detonators and accessories and holding licence under the Explosive Act, 1984. It has a manufacturing unit at Sonaparbet near Rourkela in Orissa which is also registered under both the Orissa Sales Tax Act, 1947 and the Central Sales Tax Act, 1956 with the Sales Tax Officer, Rourkela I Circle, Rourkela. M/s. IDL Chemicals Ltd., is a regular supplier of its products to different Government undertakings such as the Coal India Limited (hereinafter to be referred to as, "the CIL"), National Mineral Development Corporation, Hindustan Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of rate of payment, quality to be purchased, period of contract, etc., on acceptance of the offer, whether the Sales Tax Tribunal was correct in law to hold that it was not the contract of sale but the actual purchase and sale was triggered only when a colliery placed indent with M/s. IDL Chemicals. (2) That in view of the fact that M/s. IDL Chemicals moved goods in pursuance to the supply order placed by M/s. CIL, whether the Sales Tax Tribunal was correct in law to hold that the transactions do not constitute sale falling under section 3(a) of the CST Act. (3) That in view of the fact that the indents placed by the constituents of M/s. IDL were mere indents to take delivery of the goods, whether the Sales Tax Tribunal was correct to hold that the actual sales were triggered by such indents and had taken place inside the respective State and were intra-State sale subject to levy of tax under the law of that State." The basic question which calls for determination is whether the order placed by the CIL amounted to sale triggered by the CIL order or was an agreement to sell. On September 24, 1976 the CIL placed order for supply of explosives and detonators to its collier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of the order dated September 24, 1976 placed by the CIL. The order passed by the CIL on September 24, 1976 reads as under: "COAL INDIA LIMITED Material Management Wing, 15, Park Street, Calcutta-700 016. Order No. CIL/C-2(D)/EXPL/IDL/517 Dated: 24th Sept. 1976 M/s. IDL Chemicals Limited High Explosive Division Kukatpalli Rourkela-7 Post Bag No.1 Hyderabad (A.P.) Dear Sirs, Sub: Supply of explosives, detonators and detonating/safety fuses to Coal India Ltd.'s collieries for the period 1-6-76 to 31-5-1997. Ref: Your letter dated SD/APM/ dated 6-4-1976 and your subsequent letter and discussions. Please supply the quantities of explosives, detonators and detonating/safety fuses to the collieries of different areas as per their indents. The total quantities have been given in the enclosed Schedules I, II, III and IV. These are to be dispatched by goods/passenger train 'freight paid' and/or by road. The unit prices of the explosives, detonators and detonating/safety fuses shall be as shown in Schedule V attached herewith. Prices for non-permitted explosives, detonators and detonating/safety fuses have not yet been finalised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... You will give 1 (one) per cent rebate on the current prices for and off-take exceeding 9,000 tonnes on the full quantities of explosives ordered. The rebate will be given on each invoice of supply as and when supplies are made against this order. The rebate will be applicable from June 1, 1976 for all supplies made from that date. Please arrange to give credit notes for the past supplies made from June 1, 1976. Respective General Managers are requested to be contacted for monthwise allocation of explosives and accessories. IDL Chemicals Limited, and/or their consignment agents, namely, M/s. B.P. Agarwalla Sons (P) Ltd., P.O. Dhansar, Dist-Dhanbad, (ii) M/s. William Jacks Co (India) Pvt. Ltd., Asansol/Calcutta and (iii) Abdul Hussain Mulla Allabuxji, Nagpur, will supply explosives and accessories to mines on the basis of convenience and locations. Mines will follow the existing system of drawing their requirements from IDL and/or their consignment agents who will raise the bills accordingly and payments will be made by cheques drawn in favour of IDL Chemicals Ltd. Instructions contained in the attached Schedule VI should be strictly and invariably followed. Pleas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was issued from the apex body, i.e., the CIL to its subsidiaries, i.e., the collieries spreading over these three States. They cannot purchase the goods from any other company other than the appellant. Therefore, this firm order issued by the CIL is in the nature of purchase order specifying the quantities and the price thereof. It was only the convenient mode of supply, instead of sending the goods directly from Rourkela to various States. This convenient device was worked out by the appellant and the CIL so that the goods need not directly be sent from the company at Rourkela but would be sent through their agents in various States. This order is definitely a purchase order, the nature of indent and the modalities were agreed, the quantity of the goods to be supplied to various collieries at fixed price was firm, the insurance and freight was to be borne by the CIL and 98 per cent of the payment was to be made by the collieries of the CIL. From these facts it appears that this was a purchase order issued by the apex body, the CIL, by fixing the price and the quantities to be purchased by their collieries. Various other evidence was produced to show that, in fact, there was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hes. Hence, this was a firm order of purchase and the goods were dispatched from Rourkela to various consignment agents and from there it was supplied to various collieries. Mr. Ganesh, learned Senior Counsel for the appellant, submitted that 100 per cent of the goods were not supplied to the CIL but to various other public sector undertakings. That may be so, but the fact of the matter is that substantial quantities have been supplied to the subsidiaries of the CIL to the extent of 75 per cent. However, it was contended that 95 per cent of the supply was made to the subsidiaries of the CIL. That is a matter of evidence but it is beyond dispute that major quantity of the goods was supplied to the subsidiaries of the CIL. Mr. Ganesh, learned Senior Counsel alternatively submitted that 30 to 35 per cent of goods were supplied to other public undertakings. This is a matter of evidence and we need not to go into that question. But the substance of the matter is that major portion of the goods was supplied to the subsidiaries of the CIL and only a small quantity was supplied to other public sector undertakings. Both learned Senior Counsel for the parties have invited our attention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parate entity, that they were merely different agencies, and even where a branch office sold the goods to the buyer it was a sale between the company and the buyer. It is true that in that case the goods, on manufacture at the Madras branch factory, were directly dispatched to the Bombay buyer at his risk and all prices were shown f.o.r. Madras, and the goods were delivered to the Bombay buyer at Bhandup through clearing agents. In the instant case, the goods were dispatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not by the registered office at Hyderabad. In our opinion, that makes no difference at all. The manufacture of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an incident of the contract entered into with the buyer, for it was intended that the same goods should be delivered by the branch office to the buyer. There was no break in the movement of the goods. The branch office merely acted as a conduit through which the goods passed on their way to the buyer. It would have been a different matter if the particular goods had been dispatched by the registered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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