TMI Blog1997 (9) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... f business at Ramaiah lodge in Tuticorin where its Liaison Officer was staying and had used the port as a place of storage of cement and had effected inter-State sales therefrom. 3.. It is not in dispute that the cement transported from the Port of Tuticorin to the premises of the customers of the petitioner in the State of Kerala had been imported into India under an import licence granted to the petitioner. The import licence was for the import of 2,50,000 metric tonnes of cement. One of the conditions subject to which licence was granted was that the quantity of cement imported under the licence shall adjustable against the requirement of Kerala State as may be assessed by the Ministry of Industry, Government of India, New Delhi, for the years 1982-83 and 1983-84 . The fact that the cement came to be unloaded at the Port of Tuticorin is not in serious dispute, was purely a fortuitous circumstance. In the normal course, cement would have been unloaded at anyone of the ports in the State of Kerala. The ship had to, according to the petitioner, unload at Tuticorin Port as at that point of time, the Port of Cochin was congested and there would have been considerable delay and add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Division of the petitioner at Cochin which is dated April 22, 1983 mentions the trip sheet number, the truck number and the customer s name as the person to whom goods were delivered, the goods delivered being imported cement of 10 tonnes, the value of which is Rs. 13,000. 5.. It is on the basis of documents such as these that the petitioner has been assessed to Central sales tax. The assessing authority as also the Tribunal having taken the view that these documents establish an inter-State sale of the imported cement from its place of storage in the wharf at Tuticorin to the petitioner s customers at Kerala. The authorities were also of the view that the petitioner had to camouflage these transactions as transfer of stocks to depots as in the Material Transfer Note. It is mentioned that the stock is transferred to the petitioner s depot in Kerala and in the body of the document, it is mentioned that the goods were delivered to the customer of the petitioner at Kerala. The Tribunal by its common order has upheld the view of the assessing officer and the appellate authority that the petitioner had a place of business at Tuticorin, that it was required to register itself as a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reliance on the decision of the apex Court in Tata Iron and Steel Co. Limited v. S.R. Sarkar [1960] 11 STC 655. It was held therein that a sale being by the definition, transfer of property, becomes taxable under section 3(a) if the movement of goods from one State to another is under a covenant or incident of the contract of sale, and the property in the goods passes to the purchaser otherwise than by transfer of documents of title when the goods are in movement from one State to another. It was also held that a mere contract of sale which does not result in transfer of property occasioning movement of goods from one State to another does not fall within the terms of section 3(a) of the Central Sales Tax Act. 9.. Counsel also relied upon the decision of the Supreme Court in Commissioner of Sales Tax, U.P., Lucknow v. Suresh Chand Jain [1988] 70 STC 45. That was a decision rendered by a two-Judge Bench of the apex Court in the context of a claim by an assessee that he had only effected local sales and that the movement of the goods thereafter was effected by his purchaser. In that context the court observed that the onus lies on the Revenue to disprove the contention of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of export can be said to take place. It was in that context the court held that the chain of events must be continuous and complete without any interruption, for sale to be regarded as a sale in the course of export. The actual export must be a direct consequence of the sale. The transaction should be such that any severance at any point in that chain would result in breach of contract and that a sale of export is distinct and different from sale in the course of export. These observations of the court made in the context of export sales do not directly apply to transactions which are in the nature of inter-State sales. That there should be a direct link between the sale and the movement across the State borders is clear from the section itself. The sale must have occasioned the movement or such movement must have been incidental to the sale. It is also worthy to note that the apex Court in numerous decisions rendered by it while considering transactions of inter-State sales, has not considered it necessary at any time to rely upon or advert to the law laid down by it in the context of and in relation to export sale for the purpose of elucidating the parameters of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where the goods involved were non-standard goods. 17.. Counsel also referred to the case of Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457 wherein the apex Court held that it is not necessary that the contract of sale must itself provide for, and cause the movement of goods or that the movement of goods must be occasioned specifically in accordance with the terms of the contract of sale. It was also observed that the sale can be an inter-State sale, even if the contract of sale does not itself provide for the movement of goods from one State to another but such movement is the result of a covenant in the contract of sale or is an incident of that contract. 18.. Reliance was also placed on two decisions of this Court in the cases of Sri Ganapathy Mills Co. Ltd. v. State of Tamil Nadu [1977] 40 STC 397 and Deputy Commissioner (C.T.) v. Pudukkottai Textiles Limited [1976] 37 STC 544 wherein it was held that if the parties at the time of the contract contemplated that the goods from out-of-State places should be moved and supplied to the purchaser in order to fulfil the contract, such movement would not render the transaction an inter-State sale. 19.. The law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose in the State of Kerala who needed cement had applied to the petitioner for allotment and had paid the value in advance. It was not a condition in the arrangement between the petitioner and those customers that the cement to be supplied to them should be from out of the cement, imported by the assessee from other countries in terms of its import licence. The consumer had very little concern regarding the places from which the cement to be delivered to him, would come. The choice was entirely that of the petitioner. The petitioner in the normal course should have transferred the entire stock of cement imported by it to its own godowns at Kerala wherefrom further sales should have been effected. Having regard to the factors of convenience and with a view to save time, it had directed its transporter to deliver the cement straight from the wharf to the place of business of customers in Kerala. Had these stocks been first taken to its godowns and thereafter despatched from that point to its customers, there could have been no doubt that such a transaction would not amount to an inter-State sale. The fact that the cement imported specifically for the purpose of meeting the requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be regarded as crucial in the context of one set of facts may not necessarily be regarded as crucial in the context of another set of facts. The degree of importance to be attached to any given factor depends upon the totality of the facts of the case and the relative importance which each fact assumes in the context as a whole. In these cases the goods transported by the petitioner to Kerala was at all times meant for consumption in Kerala. It was imported for the specific purpose of meeting the requirements of the State of Kerala. The docking of the ship in a port outside the State of Kerala was a fortuitous circumstance, and once the goods came to be unloaded in the neighbouring State, they had necessarily to be moved over land to Kerala. The fact that such movement terminated at the place of business of the customer, without being first taken into the stock at its own godowns, and that such termini was at the sole option of the assessee who had in any case to deliver the cement at the place of business of the customer, cannot therefore be regarded as converting what was otherwise a local sale into an inter-State sale. What was contemplated by the assessee and its customer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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