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TMI Blog2007 (11) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Zinc Limited, etc., and supplies to these undertakings constituted almost 90 per cent of its total production. The CIL placed orders on the appellant for supply of explosive, detonators, accessories, etc., for its collieries inside and outside the State of Orissa with a stipulation that delivery should be made against the indent placed by the collieries. The appellant has its consignment agent at different places outside the State. During the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect 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 collieries. This is a crucial document from which it would be clear whether it was an agreement to sell or was a purchase order on behalf of the CIL. The supply of these goods was triggered by the appellant to its consignment agents at various places and from there the explosives and detonators were supplied to the collieries of the CIL. Therefore, whether the sale was within the State or the sale was inter- State, is the only question which has to be answered by us. Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplosives, 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 by DGS and D. Till finalisation, the prices given in Schedule V for these items will prevail. If there are any, deliveries/dispatches should be made according to requisitions made from time to time by the different colliery authorities and adjusted against the respective colliery's account. In case of road delivery by your van for supplies of explosives the van delivery charge shall be paid extra as shown in Schedule V enclosed herewith and mileage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Please acknowledge receipt of this order. Yours faithfully Sd/- (S.V. Gurumoorthy) Chief Controller of Stores Purchase." The important feature of this order is that all the managers of the collieries in the three States will have to place order with the consignment agents of IDL Chemicals from their depots. This is a modality adopted by the appellant with a view to dispatch their goods from Rourkela to various consignment agents and from there all the collieries of CIL are bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 independent transaction with the subsidiaries and the consignment agents of the appellant, and the order dated September 24, 1976 does not constitute a firm purchase order. But we regret that that cannot be of any avail for the simple reason that all supplies were made in pursuance of the order of the CIL. Therefore, that was the fountain head from where all supplies followed. If the terms of the order is to be construed as purchase order, then other evidence is secondary and irrelevant. In fact, bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, 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 to various decisions of this court. In some cases after review of facts it was found to be inter-State sale and in some other cases it was found that it was a case of intra-State sale. No useful purpose will be served to refer to those judgments because each case had its peculiar facts. But the case which is nearer home is a case in South India Viscose Ltd. v. State of Tamil Nadu [1981] 3 SCC 457 [1981] 48 STC 232 (SC).. In this case, sale of goods from seller's factory in Tamil Nadu to buyers residing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside 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 office at Hyderabad to the branch office outside the State for sale in the open market and without reference to any order placed by the buyer. In such a case if the goods are purchased from the branch office, it is not a sale under which the goods commenced their movement from Hyderabad. It is a sale where the goods moved merely from the branch office to the buyer. The movement of the goods from the registered office at Hyderabad to the branch office outside the State cannot be regarded as an incident of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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