TMI Blog2002 (8) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... the RST Act. 3.. The appellant, a public limited company having its registered office at Jodhpur with branches at different places in the State of Rajasthan, is engaged in the business of buying and selling chemicals, namely, methanol, chlorine, caustic soda lye, soda ash, hydrochloric acid, etc. It is averred that the appellant purchases the aforesaid chemicals in the course of inter-State trade from manufacturers/suppliers from Gujarat and effects subsequent inter-State sales to various buyers in the State of Rajasthan including SRF Ltd., Bhiwadi, by transfer of the documents of title to the goods, i.e., by endorsing goods receipts/bilties during their movement from Gujarat to Rajasthan. According to the appellant, these transit sales are duly supported by "C" forms from the purchasing dealers in Rajasthan and also forms E-I from the seller outside Rajasthan from whom the appellant has purchased the goods in the course of inter-State trade on "C" forms after paying 4 per cent CST. In the case of subsequent inter-State sales effected to SRF Ltd., Bhiwadi, the chemicals have been booked with the transporter by the appellant's Gujarat supplier for the destination Bhiwadi for bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember 20, 2000 and September 25, 2000, reads as follows: "In this case, the petitioner has alternate remedy available. In view of my judgment delivered in the case of B.S.L. Ltd. in S.B. Civil Writ Petition No. 651 of 2000 dated August 25, 2000, the petitioner in this case also will have to be relegated to the alternate remedy as provided by the statute. Reserving the right to pursue the alternate remedy, this petition is rejected." 4.. We have perused the judgment of the learned single Judge in B.S.L. Limited's case (supra). It was a case wherein petitioner, M/s. B.S.L. Limited purchased diesel from Indian Oil Corporation and Bharat Petroleum Corporation during the relevant assessment year. A concessional tax and surcharge was paid on it at the rate of 3 per cent instead of 4 per cent, as was leviable and in doing so, the company had misused the S.T. form No. 17. According to the department, this payment of tax at the rate of 3 per cent instead of 4 per cent amounts, in the circumstances, was to evade the tax and hence show cause notice was given to the company as to why it should not be penalised for such misuse and evasion. The learned single Judge after referring number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z., Bengal Immunity Company Limited v. State of Bihar [1955] 6 STC 446; AIR 1955 SC 661, Calcutta Discount Co. Ltd. v. Income-tax Officer [1961] 41 ITR 191; AIR 1961 SC 372, Raja Anand Brahma Shah v. State of Uttar Pradesh AIR 1967 SC 1081, Vatticherukuru Village Panchayat v. Nori Venkatarama Deekshithulu (1991) Supp 2 SCC 228, Whirlpool Corporation v. Registrar of Trade Marks (1998) 7 JT SC 243; AIR 1999 SC 22, Rohtas Industries Ltd. v. S.D. Agarwal AIR 1969 SC 707 and Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 639 (SC); AIR 1967 SC 295, the court held that the High Court has power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction more particularly in a case where such an action is likely to subject a person to lengthy proceedings and unnecessary harassment. Thus, the alternate remedy has been consistently held by the courts not to operate as a complete bar for exercise of powers under article 226 of the Constitution of India. The High Court having regard to the facts of the case, has discretion to entertain or not to entertain a petition. Inspite of existence of alternate remedy, the High Court has power to ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local sale and thereby levy of Rajasthan sales tax is in violation of and beyond the constitutional mandate contained in articles 19(1)(g), 269 and 286 of the Constitution of India. On the other hand, it is submitted by the learned counsel for the respondents that the transaction of sale of chemicals as interState sale in terms of section 6(2) read with section 3(b) of the CST Act by way of transfer of documents of title to the goods, may not be treated as an inter-State sale. As a matter of fact, there is a symbolic/constructive/notional delivery taken by the appellant first at its branch. The entries in the books are made by the appellant in the stock registers, invoices are raised and fresh delivery challans are being prepared. Thus, it is not a case of inter-State movement but clearly a case of intra-State movement, inasmuch as the movement of the goods from Gujarat to Rajasthan comes to an end, when it is delivered at the branch office. According to the learned counsel, it is a disputed question of fact, which cannot be gone into in the writ jurisdiction. 7.. In order to examine whether a case falls in any of the exceptional categories to by-pass the alternate remedy, an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or commerce or outside a State or in the distribution of taxes on sale of goods in the course of inter-State trade or commerce and to declare certain goods to be of subject importance in inter-State trade or commerce and specify the restrictions and conditions to which State laws imposing tax on sale or purchase of goods of special importance. Once a sale is prima facie found to be an inter-State sale, the tax shall be collected in the State from which the movement of the goods commenced in view of section 9(1) of the CST Act and none other. Thus, in the case of an inter-State sale, any act to realise tax from a citizen under the RST Act, will be ultra vires being in violation of the fundamental rights guaranteed under article 19(1)(g) of the Constitution. A citizen aggrieved will have a right to seek relief by a petition under article 226 of the Constitution of India. In the instant case, the learned single Judge dismissed the writ petition even without looking into the facts of the case and appreciating the contentions, which prima facie indicates that all subsequent sales effected by the appellants during the course of inter-State movement of the said goods are exempt in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the sale or purchase is one inside the State, it is at once a sale or purchase outside all other States but subject to the provisions of section 3, which defines when a sale or purchase of goods takes place in the course of inter-State trade. A sale falling within the clause (a) is excluded from the purview of clause (b) of section 3. A sale becomes taxable under section 3(a) if the movement of goods from one place to another is the result of a covenant or incident to the contract of sale and property of the goods passes to the purchaser either State or otherwise than by transfer of documents of title when the goods are in movement from one State to another. The sale contemplated by sub-clause (b) of section 3 is one which is effected by transfer of documents of title to the goods during their movement from one State to another. The sale effected by transfer of documents of title after the commencement of the movement and before its conclusion as defined by the two terminus set out in explanation 1 and no other sale, will be regarded as inter-State sale under section 3(b). The transfer of documents contemplated by section 3(b) is, therefore, such transfer as in law amounts to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment of tax made thereunder. Assessment order only quantifies the liability which is definitely and finally created by the charging section." 16.. By section 6, every dealer is made liable to pay tax on sales effected by him in the course of inter-State trade or commerce. A subsequent inter-State sale effected by transfer of documents of title to the goods during the movement of the goods from one place to another is exempt from tax under section 6(2) of the CST Act. As per the rules, a dealer in order to claim exemption in respect of second or subsequent inter-State sales has to necessarily file or produce, apart from E-I forms, also "C" forms from the purchasing dealer. 17.. It is contended that the appellant is purchasing goods in the course of inter-State route and, inter alia, selling them to buyers in Rajasthan by effecting subsequent inter-State sales in terms of section 3(b) and section 6(2) of the CST Act and, therefore, obviously recorded the said transaction in its books of account and also executed necessary supporting document. It is asserted that the subsequent sales have been effected by endorsing the documents of title during the course of inter-State m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khosla Co. Ltd. reported in [1979] 43 STC 457; (1979) 2 SCC 242, following its earlier decision in Tata Iron Steel Company's case [1960] 11 STC 655 (SC); AIR 1961 SC 65, held that if the movement of the goods from one State to another is the result of covenant or incident of contract of sale, the sale is inter-State sale. 21.. In State of Tamil Nadu v. Dharangadhara Trading Co. Ltd. reported in [1988] 70 STC 92 (SC); (1988) 3 SCC 462, the court held that since the deliveries of goods sold, were effected by the transfer of documents after the movement of goods from one State to the other, the sales could be regarded as covered under section 3(b) of the CST Act. 22.. In State of Gujarat v. Haridas Mulji Thakker reported in [1992] 84 STC 317, the assessee, distributor of carbon dioxide, took orders from Ahmedabad and Surat in the State of Gujarat. The assessee in turn placed the orders to the supplier at Bombay. The goods were despatched by the Bombay supplier directly to the purchasers f.o.r. Bombay, the transport receipts in their names. The price charged by the assessee-dealer was higher than that charged by the Bombay supplier. The delivery of the goods was taken by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee found another buyer in Bangalore, raised a separate bill and arranged the goods to be delivered to the subsequent buyer, the goods were delivered only to a common carrier and the journey had not terminated as provided in the Explanation to section 3(b) of the CST Act till the sale in favour of the subsequent buyer had taken place and in pursuance of that sale, the goods were delivered to the subsequent buyer. The court concluded that the transaction clearly falls under section 3(b) and was liable to be taxed under the CST Act as inter-State sale. 24.. Mr. Sangeet Lodha, learned counsel for the department, has referred to a decision of the Madras High Court in State of Tamil Nadu v. N. Ramu Bros. (Electricals) reported in [1993] 89 STC 481. In the said case, the assessee booked supply of generators from various customers in the State of Madras. The assessee in turn placed orders with suppliers outside the State, mostly from Delhi. The suppliers despatched the goods through lorries of South Eastern Roadways, who were having their transport office at the place of those outside State sellers and also at Coimbatore in Tamil Nadu. On despatch of the consignments, the supplier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d despatch to Rajkot and the railway receipts will be handed over to the purchasers of the goods at Rajkot. The purchasers after taking delivery of the goods from the railway, will carry out inspection of the goods. After carrying out such inspection, they used to make payment of goods. According to the assessee, the sales were concluded only after inspection and approval of the goods by the purchasers. According to the Revenue, as the sale was complete only after the purchasers took delivery of goods, inspected them and ultimately approved them, the provisions of section 3(b) of the CST Act were not attracted. The High Court held that one of the requisite conditions for applicability of section 3(b) was sale of goods and not an agreement to sale. The court also found that in the said case, the railway receipts had been endorsed by the dealer in favour of the intending purchasers during the movement of goods but sale had not taken place. The court observed that during the said period, what was in existence was merely an agreement to sale. Thus, the provisions of section 3(b) of the CST Act were not attracted. The court following the decision of the apex Court in Tata Iron and Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that there was no material on record to establish that the assessee had effected the transfer only by documents. There was also no material on record to show that the transfer of goods had been made after the goods had left Bangalore and before they had reached Tamil Nadu. In these circumstances, the court held that the transaction between the assessee and the SPIC was not an inter-State sale but an intraState sale in pursuance of the contract executed between the assessee and the SPIC. Thus, in the opinion of the court, the assessee could not claim exemption under section 6(2) of the CST Act. Apparently, this decision also does not help the department. 27.. The department has heavily relied upon a decision of the Delhi High Court in Arjan Dass Gupta Bros. v. Commissioner of Sales Tax reported in [1980] 45 STC 52. The assessee, M/s. Arjan Dass Gupta was engaged in the business of selling coal, imported from Bihar/Bengal to retailers in the Union Territory of Delhi. During the assessment year 1964-65, procurement of coal from the collieries outside Delhi and its sale in Delhi was regulated by the Delhi Coal Control Order, 1963, issued under section 3 of the Essential Commod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m one State to the other, shall be deemed to be an inter-State sale. The court found that the starting point of the movement is delivery of the goods to the carrier or bailee for transmission and the point of termination is when the goods are taken delivery of from the carrier or such bailee. The division Bench held that the Explanation contains a deeming clause and the fiction so created is to be taken to its logical conclusion. The court further held that if sale or purchase is effected by transfer of documents of title to the goods during such movement of the goods, it shall be treated as an inter-State sale. We are in respectful agreement with the view expressed by the division Bench of the Allahabad High Court. 29.. The assertion of the department to the effect that there was constructive delivery of the goods at the branch office of the appellant is on the basis of stock entries in the daily sales register and preparation of invoices/delivery of challans favouring the subsequent buyers. In this regard, Explanation I provides the clue. It defines commencement of the movement of goods and their termination and, as such, it overrides any other concept regarding commencement an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emerges from the facts that- (i) The chemicals have been booked with the transporter by the appellant Guljag Industries for destination to Bhiwadi to be delivered to SRF Limited on the instructions and on account of the appellant; (ii) In respect of all transactions in question, the appellant did not take physical/actual delivery of goods from the transporter at any time during the course of inter-State movement; (iii) The transporter had given delivery to the ultimate buyer in whose favour, goods receipts/bilties were endorsed by the appellants; (iv) The said goods merely passed through the areas where the appellant's branches/head office are located and they were carried to the destination of the subsequent buyers in that very vehicle in which they were brought from Gujarat by the same transporter. Thus factually, the movement of goods continued and the transporter also continued to carry goods as transporter. 30.. Consequently, the inference of constructive delivery raised in the instant case by the assessing authority, which is the sole basis for refusing the exemption, is patently illegal. 31.. It is also submitted by the learned counsel for the appellant that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 3(b) and section 6(2) of the CST Act. The subject sales is governed by the CST Act and, therefore, beyond the scope of the RST Act. The proceedings initiated by the authorities under the RST Act are wholly without jurisdiction and without authority of law. 32.. It is relevant to mention here that the learned single Judge dismissed the writ petition on September 18, 2000 and the assessing authority took up the matter on September 19, 2000. A request was made before him to adjourn the matter to enable the appellant to challenge the said judgment before the division Bench but the same was declined. This fact is noted in the order dated September 22, 2000. In view of the post judgment development, the amendment was granted whereby a prayer has been made to quash the order of the assessing authority dated September 19, 2000. 33.. Consequently, all the three special appeals being D.B. Civil Special Appeal Nos. 907 of 2000, 938 of 2000 and 933 of 2000 are allowed; the judgments of the learned single Judge dated September 18, 2000, September 20, 2000 and September 25, 2000, passed in S.B. Civil Writ Petition Nos. 3345 of 2000, 3624 of 1999 and 3202 of 1999 respectively are set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
