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TMI Blog2007 (8) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... s judgment and urging various grounds in support of the same and prayed to set aside the impugned judgment and to restore the orders of the first appellate authority by answering the questions of law in favour of the Revenue. This court on November 21, 2005, admitted this petition and framed the following questions of law, which read thus: "1. Whether there could be any subsequent sale effected by the respondent as per Explanation 1 appended to section 3(b) of the CST Act in furtherance to the ultimate buyer-KPTCL before the commencement of the movement of the goods from other State to the State of Karnataka? 2.. Whether the three independent simultaneous transactions of sale effected before the commencement of movement of goods could be regarded as covered under section 3(a) of the CST Act and not under section 3(b) of the CST Act? 3.. Whether the State of Karnataka which has issued "C" forms to the registered dealer is the "appropriate State" to levy CST as per the proviso appended to section 9(1) of the CST Act? 4.. Whether the Tribunal is right in holding that the levy of tax can be attracted in the State of Karnataka only when there is a local sale or an inter-Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Questioning the correctness of the findings of the KAT referred in the impugned judgment on the contentious points framed and answered against the Revenue, Smt. Sujatha, the learned A. G. A., contended that the KAT has completely ignored the contract executed by the respondent in favour of the KPTCL for supply of capacitor banks at various site locations in the Karnataka State designated by the KPTCL, namely, supply contract, civil contract and erection contract. The assessing authority has examined the terms and conditions of the supply contract and found that the transaction of the respondent with the KPTCL was an inter-State sale which falls under section 3(a) of the CST Act. Further, it is urged that KAT has erred in not considering the relevant finding of fact recorded by the assessing authority that the sale of goods was completed when they were appropriated before the commencement of movement of goods from the manufacturer's place to KPTCL, and that therefore section 23 of the Sale of Goods Act is attracted to the case on hand. Hence the assessing authority held that the sale of goods cannot be under section 3(b) as contended by the respondent for the purpose of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89] 74 STC 201, wherein the Andhra Pradesh High Court, after considering sections 6(2) and 9(1) of the CST Act, has held that the object of the proviso to sub-section (1) of the above provisions of the CST Act is to determine or to specify the appropriate State competent to tax second or subsequent sales not falling under section 6(2) of the CST Act. She has contended that the said decision on all fours is applicable to the case of the Revenue for the reason that sub-section (1) to section 9 of the CST Act was inserted by way of an amendment to the statute after the decision of the Madras High Court in the case of State of Madras v. Nandagopal Chetty (K.) [1968] 22 STC 290 and also placed reliance upon another Division Bench decision of the Madras High Court reported in Vinay Cotton Waste Company v. State of Tamil Nadu [1986] 63 STC 391 wherein the Division Bench has interpreted clause (a) of section 3 of the CST Act and laid down the principles of law stating that the inter-State sales fall under clause (a) of section 3 of the CST Act and also placed reliance upon English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 wherein the apex court inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her he has contended that section 23 of the Sale of Goods Act, 1930 relied on by the learned A.G.A., is not applicable to the factsituation and therefore he has urged that reliance placed upon the said provisions of the Act and decisions referred to supra are misplaced as they do not apply to the fact-situation. The learned Senior Counsel Mr. Sarangan in support of his submission has relied on the decision of the Supreme Court reported in the case of Bharat & Co. v. Trade Tax Officer [2006] 144 STC 81; [2005] 6 SCC 796. Placing reliance upon the said judgment he has vehemently contended that the concurrent finding of fact recorded by the appellate authority on the basis of the lorry receipt merely goes to show that consignee's name is shown as KPTCL for delivery of goods to the KPTCL. It is submitted by the learned Senior Counsel that the concurrent finding recorded by the appellate authority that the sale of goods falls under section 3(a) of the CST Act and it is not a sale during transit, as the title of the goods were transferred in favour of the KPTCL at the commencement of goods at Chennai, Tamil Nadu State is factually and legally not correct. Today he has placed strong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cription and goods of that description and in deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made." (emphasis(1) laid by us) Sections 3(a), 6(2) and 9(1) and provisions of the CST Act read thus: "3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.-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) . . . 6.. Liability to tax on inter-State sales.-(1) . . . (2) Notwithstanding anything contained in sub-section (1) or subsection (1A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the KPTCL for supply of the capacitor banks to be erected at various locations in the State of Karnataka by entering into, civil contract and erection contract by it with the KPTCL. The revised returns submitted by the respondent before the assessing authority has been examined by him with reference to the contract which was entered into between the respondent and the KPTCL for supply of aforesaid goods. The lorry receipt issued by Maruthi Road Carriers, Hyderabad, clearly mentions the name of the consignor for supply of the goods in favour of the KPTCL. The same were delivered to the KPTCL. The goods were manufactured at Chennai as per the specifications mentioned in the contract with the respondent and the goods were delivered in favour of the KPTCL by executing its contract. Therefore the sale of goods in favour of the KPTCL was completed when the goods were appropriated by the KPTCL before commencement of movement of goods from the manufacturer's place, namely, Chennai to the KPTCL in the Karnataka State. Therefore, that the inter-State sale of goods of capacitor banks falls under section 3(a) of the CST Act is the finding recorded by the assessing authority in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds thus: "In our view, therefore, within clause (b) of section 3 are included sales in which property in the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto: clause (a) of section 3 covers sales, other than those included in clause (b), in which the movement of goods from one State to another is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State. " (emphasis(1) laid by us) Further in the above case it has observed at page 667, unnumbered para 3, which reads thus: " The question to which attention must then be directed is, which out of the two or more States concerned with the goods sold under an inter-State sale is entitled to collect the tax under Act 74 of 1956. By section 9, the tax payable by any dealer under the Act is to be levied and collected in the 'appropriate State'. The expression 'appropriate State' was at the material time defined by section 2(a) as follows: '"Appropriate State" means- (i) in relation to a dealer who has one or more places of business situate in the same State, that State; (ii) in relation to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities and the High Court." Further, another decision of the Supreme Court in the case of State of Tamil Nadu v. Dharangadhara Trading Co. Ltd. [1988] 70 STC 92, the apex court, with reference to the terms of the contract, observed thus at page No. 96: ". . . It was clear that the movement of the goods from the State of Tamil Nadu to the outside States was occasioned by the terms of the contract themselves and the sales were inter-State sales falling within section 3, sub-section (a) of the Central Sales Tax Act, 1956. Alternatively, if a view were taken that the sales did not fall under subsection (a) of section 3, the deliveries of goods sold were effected by the transfer of documents after the movement of the goods from Tamil Nadu to other States had commenced and the sales could be regarded as covered under sub-section (b) of section 3 of the Central Sales Tax Act." This decision is referred to by the Division Bench of the Madras High Court in the case of Tractors & Farm Equipments Ltd. v. State of Tamil Nadu [1999] 112 STC 300 at paragraph 9, which reads thus: "9. As we have found that the sale effected by the vendor of the assessee to the assessee was a sale occasione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 9(1), it must be understood, is only to determine or specify the appropriate State competent to tax such second or subsequent sale. For this purpose, even where the sale in favour of a dealer effecting such second or subsequent sale is exempt, one has to see from which State he could have obtained the declaration in C form, had it been necessary for him to furnish such a declaration. Thus, the said words would take in not only a situation where a dealer, who could have obtained such form, fails to obtain, but also covers a situation where it is not necessary for him to obtain such a declaration." Further, at page 208, observation is made with reference to section 8(1) and 8(4) of the CST Act. The learned AGA has placed strong reliance on the observations having regard to the undisputed fact that "C" form has not been obtained by the respondent from the department of the State in respect of the sale of goods sold on the basis of contract entered by respondent in favour of KPTCL and it is stated by it that for obtaining the same it has applied to the Department, but it has not furnished to the respondent in respect of turnover of the transaction of inter-State sale of goods in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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