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TMI Blog2007 (8) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... d trading of seed cleaning and grading machines. The petitioner sent a quotation on March 20, 2007 (annexure P1) to the Punjab Agriculture University, Ludhiana with regard to supply of agrosaw specific gravity separator, model GI. Apart from other things, the price of the product was mentioned to be F.O.R. destination. The University vide its letter dated March 29, 2007 (annexure P2) accepted the price quoted by the petitioner and asked for supply of the machine. Accordingly, the petitioner sold the machine to the University vide invoice/bill dated May 1, 2007 (annexure P3) and in pursuance to section 3 of the CST Act, the petitioner paid Central sales tax at four per cent as the sale was inter-State transaction. This fact is evident from the invoice dated May 1, 2007 (annexure P3). Accordingly, the goods were loaded in truck No. HR 07GA 0118 for delivery from Ambala to Ludhiana. When the truck loaded with goods reached ICC, Shambhu (import) barrier the agent of the petitioner produced documents for giving information and for obtaining form ST XXIV-A by generating the same from ICC. However, the goods and the truck were detained by the Excise and Taxation Officer-cum-Detaining Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh Shri S.S.Bangar, Excise and Taxation Officer has taken the stand that the petitioner has violated sections 21(1) and 6(3)(a)(i) of the Punjab VAT Act which has been enforced to enhance the Government revenue by plugging evasion of sales tax. It is alleged that the goods were meant for trade and the petitioner has been carrying business on F.O.R. basis in Punjab without registration TIN (Tax Index Number). On merits, in para 3, the respondents have claimed that the sale is not inter-State sale but local sale. At the time of detention, the petitioner was still to complete the delivery of goods as it was on F.O.R. basis. The payment of the goods was not received from the consumer. Hence, the goods were not owned by the Punjab Agriculture University. The petitioner was yet to sell the goods in Punjab and to receive the payment in Punjab itself. On the basis of the aforementioned features, it has been claimed that the petitioner has to be regarded as a dealer in Punjab and therefore registrable in Punjab. He is liable to pay CST in Ambala as well as in Punjab. Mr. Avineesh Jhingan, learned counsel for the petitioner, has argued that the sale made by the petitioner has to be necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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." The aforementioned provision came up for consideration of the honourable Supreme Court in K.G. Khosla's case [1979] 43 STC 457. Their Lordships have interpreted section 3 of the CST Act and held that it has three features which are summed up by the apex court as under (at page 458): "Held, (i) that if a contract of a sale contains a stipulation for the movement of the goods from one State to another, the sale would certainly be an inter-State sale. But for the purposes of section 3(a) of the Act 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. A 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; (ii) that goods conforming to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods from Ambala to Punjab Agriculture University, Ludhiana. A perusal of the bill shows that the petitioner has added sales tax at four per cent in pursuance to the provisions of section 3(1) of the CST Act by treating the same as inter-State sale. The second ingredient is also evident that the goods have moved from the State of Haryana to State of Punjab in pursuance to the contract of sale as evidenced by letter of acceptance. It is nobody's case that the sale was the proximate cause of the movement of oods and the third element is also fulfilled because the sale has been concluded in the State of Punjab at Ludhiana in pursuance of the movement of goods from Haryana. Accordingly, it has to be held that all the ingredients of inter-State sale stands fulfilled in the present case and the sale in question has to be so held. The view is also supported by the judgment in the case of K.G.Khosla's case [1979] 43 STC 457 (SC). We find no substance in the argument that the petitioner is also required to register itself under the Punjab VAT Act failing which he would be violating the provisions of section 21 of the Act. A similar argument in respect of sale of electricity was ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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