TMI Blog2009 (2) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... s could sell their goods either by way of stock transfer or inter-State sale or local sale becomes irrelevant. The obligation of the purchasing dealer(s) under the contract indicates the control of the assessee over the movement of the goods. - Civil Appeal Nos. 1323-1327 of 2009 - - - Dated:- 27-2-2009 - KAPADIA S.H. AND DATTU H.L. JJ. S.K. Bagaria, Senior Advocate (Praveen Kumar, Advocate, with him) for the appellant. L. Negashwar Rao and Ashok Panda, Senior Advocates (C.R. Sridharan, Rajan Narain and Raj Rajeshwari Shukla, Advocates, with them) for the respondent. -------------------------------------------------- The judgment of the court was delivered by S.H. KAPADIA J. L eave granted. The short question which arises in this batch of civil appeals is: whether the taking of the delivery of chemicals in Delhi by the purchasing dealers, in the context of they being the distributors/stockists of the assessee (appellant), for the assigned territories outside Delhi would take away the transaction in question from the category of inter-State sale(s). Facts in Civil Appeal No. 1323 of 2009 arising out of S.L.P. (C) No. 20624 of 2007 During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement(s) indicated that all supplies were to be made ex-works of the assessee. Under the said agreement(s), the purchasing dealers were required to take local delivery at the factory gate. Under the said agreement(s), the purchasing dealer(s) were required to store the said chemicals in their own godowns in Delhi. Under the said agreement(s), however, the assessee had to fix the price(s) at which the chemicals were to be sold in the different assigned territories outside Delhi. Accordingly it was held by the Appellate Tribunal, under the facts and circumstances of this case, that under the said covenant of agency, since the chemicals were to be sold in the assigned territories outside Delhi, the transaction(s) was inter-State sale(s). In this connection, the Appellate Tribunal placed heavy reliance on clauses 3 and 7 of the said agreement(s). The Appellate Tribunal once again directed the assessing authority to give one more opportunity to the assessee to produce the requisite C forms in respect of the sales made to the said three registered/purchasing dealers. Aggrieved by the decision of the Appellate Tribunal, however, the assessee approached the High Court of Delhi by fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods to your territory outside Delhi, you would give us freight charges and also be liable for Central sales tax. 4.. Shortage/losses/damages in transit The basis of billing and payment for each supply shall be the weight shown in the relative challan and we shall not be responsible for any shortage/losses/damages in transit after the goods have been loaded to the satisfaction of the railway authorities/carriers. 5.. Selling rates These will be fixed by us from time to time taking into consideration cartage and other incidental charges and you will not be entitled to charge higher rates. 6.. Sales of products of other manufacturers During the period of this agreement, you shall not deal directly or indirectly in the sale of any identical products of other manufacturers. 7.. Agency security deposit You shall give us a security deposit of Rs. 2,000 to ensure the due fulfilment of the agreement. This deposit shall carry interest at the rate prevailing from time to time, which will be one per cent less than the bank rate. This deposit shall be liable to forfeit in part or in full at our discretion in the event of breach of the terms of agreement." Conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i by the appellant. According to learned counsel, the appellant was not concerned with subsequent sale(s). According to learned counsel, in the present case, the purchasing dealer(s) had no obligation to occasion the movement of goods to the assigned territories pursuant to or as an incident of the appellant's sale to them. According to learned counsel, the appellant has sold the goods locally to the purchasing dealers who were free to sell the goods to their own buyers in the assigned territories in either of the three ways, mentioned above. There was no bar or restriction on the purchasing dealers on selling the goods in any of the three modes, mentioned above. The learned counsel further submitted that under clause 3 of the said agreement it was made clear that in the event of the purchasing dealer(s) desiring the assessee to transport the goods to their assigned territories outside Delhi they would pay the freight charges and also be liable for Central sales tax and in such cases the appellant's sale(s) to the purchasing dealer(s) would be sale(s) in the course of inter-State trade or commerce. According to learned counsel, the agreement in question did not cast any obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a transaction could also be an inter-State sale even if the contract did not expressly provide for the movement of goods but in fact such movement took place consequent upon a covenant in the contract or as an incident of that contract. According to learned counsel, both the aforestated judgments in the cases of Tata Engineering [1970] 3 SCC 697 See [1971] 27 STC 127 (SC). and K.G. Khosla [1979] 2 SCC 242 See [1979] 43 STC 457 (SC). were applicable to the facts of the present case and, therefore, no interference was warranted in the impugned judgment. Findings The main contention advanced on behalf of the assessee before us was that sales having been made in Delhi, ex-works of the assessee and there- after the chemicals having been stored in the godowns of the purchasing dealers in Delhi, the transactions were local sales and not inter-State sales. The short point which we have to decide in this batch of civil appeals is whether the movement of chemicals was under the obligations, indicated in the contract, or whether such movement was due to reasons extraneous to such obligations. In our view taking of delivery in Delhi by the purchasing dealers for their assigned territor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the contract. In the circumstances, we agree with the concurring findings of fact recorded by all the authorities below that the sale of chemicals effected by the assessee to its purchasing dealers, who in turn were obliged to effect their sales in their respective territories outside Delhi, involved inter-State movement of goods and, therefore, the sales in question were inter-State sales. Accordingly, we find no infirmity in the concurring findings of fact recorded by the authorities below. In our view the judgments of this court in the cases of Tata Engineering [1970] 3 SCC 697 See [1971] 27 STC 127 (SC). and K.G. Khosla [1979] 2 SCC 242 See [1979] 43 STC 457 (SC). are squarely applicable to the facts of the present case. Before concluding, we may note that the basic contention advanced on behalf of the assessee was that the purchasing dealer(s) had to take delivery of the goods ex-works; that they were required to store the chemicals in their godowns in Delhi and the said chemicals were to be disposed of by the said purchasing dealers in the following manners: (a) stock transfer; (b) inter-State sales (c) local sales It was urged on behalf of the assessee that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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