TMI Blog2011 (4) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... f F forms which he found defective, give them opportunity of being heard, permit them to rectify the defects - writ petitions are disposed of accordingly - Writ Petition Nos. 8258, 9400, 9414, 9442 and 9448 of 2009 - - - Dated:- 28-4-2011 - Goda Raghuram, Ramesh Ranganathan, JJ. S. Ravi for the Petitioner P. Balaji Verma, Special Standing Counsel for Commercial Taxes for the Respondent ORDER Ramesh Ranganathan, J:- In these writ petitions, filed by Bharat Electronics Limited, Machilipatnam unit, the orders under challenge are the revisional orders passed by the first respondent under the Central Sales Tax Act, 1956 (the CST Act). W. P. No. 8258 of 2009 relates to the assessment year 2001-02, W. P. No. 9400 of 2009 to the assessment year 2002-03, W. P. No. 9414 of 2009 to the assessment year 2003-04, W. P. No. 9448 of 2009 to the assessment year 2004-05 and W. P. No. 9442 of 2009 to the assessment year 2005-06. The facts in W. P. No. 9442 of 2009 (relating to the assessment year 2005-06) may be taken as representing the facts in this batch of writ petitions. The petitioner, a Central Government public sector undertaking engaged in the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -held thermal imager, night vision goggles and binoculars, night scopes and integrated observation equipments, etc., which form part of a larger machinery/unit manufactured by the units of the petitioner-company situated outside the State of Andhra Pradesh ; the Machilipatnam unit did not enter into any contract with the Indian Defence Services/Para-Military forces ; the units, where the final goods were manufactured, had entered into such contracts, and had paid tax on the sales effected by them ; transfer of goods by the Machilipatnam unit, to other units of the petitioner-company located outside the State, did not constitute "sale" as the petitioner-company, a distinct legal entity, cannot be said to have sold goods to itself ; movement of goods from within the State, to units situated outside the State, is not an incident of the contract of sale entered into between the unit located outside the State with the eventual buyer ; the goods transferred from the Machilipatnam unit to units outside the State, and the goods sold by units situated outside the State to its buyers, were not the same goods ; they did not constitute "inter-State sale" ; in the absence of details being furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301 (SC), English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 (SC) and Bharat Heavy Electricals Ltd. [1996] 102 STC 345 (AP). In their reply to the revised show-cause notice, issued by the first respondent on March 6, 2009, the petitioner submitted that its Machilipatnam unit had not entered into a contract with any of the purchasers of goods from its other units ; the Machilipatnam unit had supplied only components for certain equipment ; such supply of parts and components were used by the receiving units in their manufacturing process ; the components transferred by the Machilipatnam unit only figured as components and parts of a larger machinery or item which were sold by the units located outside the State to its customers ; it is only the goods sold by units located outside the State as a larger machinery, or as other items, to the armed forces which could be brought to tax, and not the components transferred from the Machilipatnam unit of B. E. L ; and the goods transferred by them to other units of the petitioner-company were not sold as they were. The petitioner further stated that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent places engaged either in the same line of manufacture or trading or in different manufacturing or trading activities. Normally, the units or divisions will have no separate identity of their own, much less a distinct legal entity. There may be separate establishments, separate planning and separate management, but these aspects by themselves do not detract from the basic characteristic of communion with the corporate body that had created these units or divisions. They can claim no independent existence apart from the company itself. The property of these units or divisions is legally held by the company. The profits generated by the units form part of the company's income and will go to the benefit of general body of shareholders of the company. So also, the liabilities or losses incurred by the individual units, in ultimate analysis, will have to be borne by the company. It is the company (the K.C.P. Ltd.) that can sue for the recovery of property or dues or be sued for the outstandings due on account of dealings of the units. It is on record that a single balance sheet is prepared by the company in respect of all the units and divisions owned and controlled by the company. . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State to the unit outside the State cannot be regarded as an incident of the sale of goods to the buyer. If the goods transferred from the unit within the State to the unit outside the State are not the same goods which are eventually sold to the buyer the inter-unit transfer of goods would not constitute inter-State sale of goods exigible to tax under the CST Act. In Bharat Heavy Electricals Ltd. [1996] 102 STC 345 (AP), the Supreme Court held (pages 361 and 362 in 102 STC):- " . . .The Tribunal missed to note that the plant and equipment which is the subject-matter of contract such as boiler package or turbo generator package is incapable of being manufactured and despatched as a finished unit. Necessarily, the equipment/components or assembled units have to be despatched to the customer's site and installed there. The contract does not contemplate the despatch of a ready-made finished product to the customer's place for instantaneous use in the power-plants, etc. On the other hand, it is clear from the terms of the contract, especially the price payment clause, that the components and parts forming part of the larger package should be supplied from time to time by B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is found that the pumping sets were part of the machinery to be supplied under the contract of sale, there could be no question of treating the movement of pumping sets from Ghaziabad to Delhi head office of the company as sale transactions subject to the Central sales tax. There was no sale of the goods by the assessee to the head office. Further there was no contract of sale for pumpsets and the pumpsets were a part of the goods sold. There is a further finding that the goods were assembled in Delhi and the title passed to the buyer in Delhi. In this view of the matter, the assessee is not liable to pay Central sales tax on the pump sets. . ." It is only if the goods, which move from one State to another, are sold as they are and are not incorporated in, or do not form part of, other goods would the question of such transfer of goods attracting levy of tax under the CST Act, as an inter-State sale, arise. It is not in dispute that the goods supplied by the Machilipatnam unit, to other units of BEL located outside the State, are merely components of, and are incorporated in, the goods manufactured by other units of the petitioner-company locate outside the State of A. P., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained from the prescribed authority along with evidence of despatch of such goods and, if the dealer fails to furnish such declaration, then the movement of such goods shall be deemed to have been occasioned as a result of "sale". Rule 12(5) of the Central Sales Tax (Registration and Turnover) Rules, 1957 stipulates that the declaration, referred to in sub-section (1) of section 6A, shall be in form F. Sub-section (2) of section 6A of the CST Act creates a legal fiction to the effect that the transaction was occasioned otherwise than as a result of sale. The initial burden is on the dealer to prove that the movement was occasioned by reason of transfer of such goods otherwise than as sale. Prior to its amendment sub-section (1) of section 6A gave the dealer the option of filing a declaration in form F. After its amendment, a dealer is now required to file the declaration failing which the transaction is deemed to be an inter-State sale. On a declaration to that effect being filed by the assessee in form F an inquiry is to be made by the assessing authority to satisfy himself that the movement of goods was occasioned otherwise than as a result of sale. The purpose of verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrovert, correct or comment on other evidence or information that may be relevant to the decision. (Judicial Review of Administrative Action : Fifth Edition : De Dmith, Woolf and Jowell). It is essential to state the particulars to enable the person to answer the case against him. A notice which does not mention the particulars, on which the case against the person is based, cannot provide a foundation for the proceedings that follow. (Nasir Ahmad v. Asst. Custodian General, Evacuee Property AIR 1980 SC 1157 ; [1980] 3 SCC 1). If the statute requires the authority to pass an order on inquiry, or on being satisfied of the existence or non-existence of a fact, then the duty cast is higher and an order which is passed, without due regard to the duty to investigate, may be mindless. (Smt. Shrisht Dhawan [1992] 1 SCC 534). As the show-cause notices, which preceded the impugned revisional orders, do not give details of the alleged defects in the F forms the petitioner-dealer has been denied the opportunity of effectively showing cause why such F forms were not defective or to have the defects therein rectified, and then resubmit valid F forms. The show-cause notice, in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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