TMI Blog1994 (11) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing authority under section 6-A of the Central Act on the ground that it is in respect of stock transfers to the branches of the assessee and that it was also covered by declarations in form "F". The Deputy Commissioner (C.T.), Visakhapatnam, in exercise of the revisional power under section 20 of the State Act, revised the assessment and withdrew the exemption granted by the assessing authority in respect of the disputed turnover, referred to above. On appeal by the assessee, the Sales Tax Appellate Tribunal allowed the appeal holding that the disputed turnover related to stock transfers and thus confirmed the order of the assessing authority. Assailing the correctness of the order of the Tribunal, the tax revision case is filed by the State. The learned Government Pleader for Commercial Taxes contends that the movement of the goods was occasioned by the sale of the paints by the assessee to the Shipping Corporation of India Limited (for short "S.C.I."), therefore, the turnover is in respect of inter-State sale under section 3(a) of the Central Act. He further contends that the effect of withdrawal of the exemption by the revisional authority would be that the "F" forms w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f inter-State trade or commerce if the sale or purchase,- (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation 1.-Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2.-Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State." A perusal of the provisions, extracted above, shows that it raises a presumption of law and that is-a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce, if the sale or purchase----(a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advantage of the presumption under section 3(a) and/or (b) 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 in the course of inter-State trade or commerce, then the assessee can rebut the presumption by filing declaration in form "F" under section 6-A of the Central Act to prove that the movement of goods was occasioned not by reason of sale but otherwise than by virtue of sale. Where 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 6-A would be of no avail. In the instant case the case of the Revenue is based on the agreement and not on the presumption under section 3(a) of the Central Act. The Shipping Corporation of India called for tenders for the supply of paints suitable for marine ships. The assessee submitted its tender which was accepted. The terms of acceptance of the tender, are contained in letter No. 151/00/650, dated August 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the officers/agents of the Shipping Corporation of India at the rates and on the terms mentioned in the Schedule. Clause (2) clarifies that the rates mentioned in the Schedule are for free delivery on board the vessels at the port concerned and that no extra charges would be payable for delivery of paints to vessels in stream and that the rates would be inclusive of port and customs charges, octroi duty, if any. Clause (8) enjoins on the assessee to keep the rates unaltered for the abovesaid period including the period of extension and that there shall not be enhancement in the rates during the said period. Clause (13) enjoins on the assessee to maintain adequate stock of paints to meet the requirements of S.C.I. throughout the period of contract and makes the assessee liable for the risk caused in default of complying with the said condition. Clause (15) casts an obligation on the assessee not to supply any paints, shades, types or quality not covered by the contract unless and until the assessee has received prior written order specifically indicating the rates of such items. However, if there has been a supply of items other than those covered by the contract, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tender made by the Union of India, the respondent therein submitted his tender for supply of jaggery during the months of February and March, 1948. The tender was accepted by the Union of India and the respondent was asked to furnish security. The terms of the tender, inter alia, contemplated that the delivery of of the quantity should be made on March 1, 1948, on March 22, 1948; on April 5, 1948, and on April 21, 1948. Subsequently the dates of delivery of jaggery were changed. After February, 1948 the Union of India cancelled the agreement for supply of the balance of jaggery. In the suit filed by the respondent for recovery of damages for breach of contract, it was held by the Supreme Court that the acceptance of the tender did not amount to placing the order for any definite quantity of jaggery on a definite date and, therefore, did not amount to a contract in the strict sense of the term in view of the provisions requiring a deposit of security and the placing of the formal order. When an understanding reached between the parties for supply of goods at a future date, would become a binding contract, was discussed by Cheshire and Fifoot in his authoritative treati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terms of the letter of acceptance of the tender contemplate that the assessee would keep the paints of the variety, which was the subject-matter of tender, ready at their sub-offices or branches and that they were bound to supply as and when the order was placed by the S.C.I. with the assessee, it can only be a standing offer but not "sale" or an "agreement to sell". We shall now refer to the earliest case on this aspect decided by the Supreme Court. In Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207, the Supreme Court laid down that before a sale could be said to take place in the course of inter-State trade or commerce the following conditions must be satisfied-(1) There must be an agreement to sell containing a stipulation, express or implied, regarding movement of goods from one State to another; (2) in pursuance of that agreement, the goods should have in fact moved from one State to another; and (3) ultimately, a concluded sale should take place in the State where the goods were sent; and (4) that State is different from the State from which the goods moved. Applying the above tests to the facts of the present case, it cannot be said that conditions (1) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed to have taken place in the course of inter-State trade or commerce, the covenant regarding such movement need not be specified in the contract itself and that it would be enough if the movement was in pursuance of and incidental to the contract of sale. In Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457, the question that arose for consideration of the Supreme Court was whether the sales made by the assessee were made at Faridabad in the course of inter-State trade or within the Union Territory of Delhi. The High Court of Delhi was of the view that the sales were inter-State sales assessable to sales tax under the Central Act by the authorities at Faridabad. On appeal, the Supreme Court held that if a contract of sale contains a stipulation for the movement of the goods from one State to another, the sale would certainly be an inter-State sale and that the contract need not provide for such movement of goods. In that case the Supreme Court laid down as under: "The question as regards the nature of the sale, that is, whether it is an inter-State sale or an intra-State sale, does not depend upon the circumstance as to in which State the property in the goods pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property in the goods passed in one State or the other, if the effect of such a sale is to have the movement of goods from one State to another, an inter-State sale would ensue and would result in exigibility of tax under section 3(a) of the Central Sales Tax Act on the turnover of such transaction. Now reverting to the facts of the present case, we have already pointed out that there has been no sale which has occasioned the movement of goods. Acceptance of the tender of the assessee to meet the requirements of the orders that would be placed from time to time resulted in a standing offer by the assessee pursuant to which arrangements were made for the sale of paints to S.C.I. There was no obligation on the S.C.I. to accept the goods which have been moved to the branches; nor could there be any complaint for not taking of the goods after the goods had arrived at the branches, here the process of sale commenced only after an order was placed by the S.C.I. with the respective branches which delivered the goods and effected sales. This being the position, the test laid down above is not satisfied. In this view of the matter, the order of the Tribunal holding that the withdrawal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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