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TMI Blog2009 (6) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as State Road Transport Corporations. These sales to "institutional buyers" were treated as inter-State sales while rejecting the appellant's version of stock-transfers to the branches in other States. The dispute in this appeal is confined to such sales to "institutional buyers" only. The appellant filed "F" forms prescribed by section 6A(2) of the CST Act read with the Rules in support of its claim for exclusion of branch transfers from the purview of CST assessment. In respect of the corresponding sales outside the State of Bihar (presently the State of Jharkhand), local sales tax was paid by the RSOs to the respective States. Broadly, the question that arises for consideration in the present appeal is whether the chassis sent against "F" forms from the manufacturing unit at Jamshedpur to the various RSOs, are stock transfers as claimed by the appellant or whether they are inter-State sales as held by the assessing officer? The assessing authority disallowed the claim of stock transfers in respect of the disputed turnover on the ground that the movement of chassis from Jamshedpur was in fulfilment of the contracts of sale entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-called stock transfers to RSOs are really direct inter-State sales to the institutional buyers. In the circumstances, it is the State of Bihar and now the successor State of Jharkhand which is the appropriate State to levy and collect the Central sales tax on these transactions. The Senior Counsel for the State of Jharkhand has taken us through relevant portions of the assessment order and contended that the findings are in conformity with the principles laid down by the Supreme Court and the Tribunal's order of affirmance cannot be faulted. It is stressed that the appellant failed to furnish the sales statements of all the RSOs before the assessing authority and therefore best-judgment assessment was resorted to. It is the case of the appellant-assessee that the head office/marketing office at Mumbai prepares a production Schedule for the manufacture of various chassis based on the market projection and estimates and that no production is made to service a particular order placed by a named customer except in case of sales to DGS and D, the army and the police whose requirements are specific and need special attention. As far as the disputed turnover is concerned, it rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, for example, would indicate that the statement of vehicles transferred to Calcutta RSO during October, 1995 (vide page 26 of the rejoinder affidavit) only mentions the chassis numbers and the stock dispatch memo numbers. There is no reference to any customer or purchase order. Even the stock dispatch memo (at page 27 of the rejoinder affidavit) does not mention the name of any customer or refer to any order. On receipt of chassis, the Calcutta RSO does not make reference to any specific purchase order or the name of the customer at the time of taking them into its stock. (v) The various RSOs receive the chassis which are manufactured not only at Jamshedpur but also at two other manufacturing facilities at Pune and Lucknow. Thus, a particular RSO would typically have chassis not only manufactured at Jamshedpur but also from the other two manufacturing facilities. It is for the RSO therefore to decide which particular chassis has to be appropriated to which particular contract out of a pool of similar vehicles available with the RSO. The appropriation if any, takes place at the level of the RSO and more specifically in the RSO at the time when the invoice is prepared by the RSO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment has arbitrarily taken a different view, deviating from the consistent practice of accepting the claim of branch transfers. It is submitted that the appellant has satisfactorily discharged the burden of proof by filing "F" forms which were all through being accepted and that the assessing officer could not bring on record clinching material to rebut the evidence furnished by the appellant. The Tribunal, which is the highest appellate body in the State, did not address itself independently to the crucial aspects and the contentions raised by the appellant. The first appellate authority, namely JC (Appeals), Jamshedpur, dismissed the appeal. The revision petition filed before the Commercial Taxes Tribunal also met with the same fate. We find no discussion and no reasoning either in the order of the Appellate Commissioner or the Tribunal. In those orders, what all we find is a copious reference to the facts giving rise to appeal/revision, summary of findings of the assessing officer, the arguments and the case-law cited. There is only an expression of agreement with the assessing authority's findings in a general and sweeping manner. We shall refer to this aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes, Jamshedpur [1970] 26 STC 354 (SC); [1970] 1 SCC 622, a Constitution Bench of the Supreme Court while reiterating the law laid down in TISCO case [1960] 11 STC 655 (SC) relied on the dicta in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer, Erunakulam [1964] 15 STC 753 (SC) in which section 5(1) of the CST Act fell for consideration. Section 5 ordains that the sale or purchase of goods shall be deemed to take place in the course of export, if the sale or purchase occasions the export. Thus the language in section 5(1) is similar to the language in clause (a) of section 3. Accordingly, their Lordships clarified while referring to Ben Gorm case [1964] 15 STC 753 (SC) that "the principle settled by that decision would undisputedly be applicable to section 3(a) of the Act" and then observed (page 376): "It has been laid down that the sale in the course of export predicated connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted without a breach of the contract or the compulsion arising from the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyer ... " A situation in contrast was highlighted by the learned judges in the following passage: (page 306) "... It would have been a different matter if the particular goods had been dispatched by the registered office at Hyderabad to the branch office outside the State for sale in the open market and without reference to any order placed by the buyer. In such a case, if the goods are purchased from the branch office, it is not a sale under which the goods commenced their movement from Hyderabad. It is a sale where the goods moved merely from the branch office to the buyer ..." A similar situation exists here, according to the appellant. The case of Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457 (SC) was also a case of manufacture of goods as per agreed specifications and thereafter despatching the goods to the head office for delivery to the respective customers at whose instance and pursuant to the contracts with whom the goods were manufactured. While holding that they were inter-State sales, it was observed that "the goods could as well have been dispatched to the respective customers directly from the factory but they were sent in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the engine and the chassis number and it was open to the appellant till then to allot any vehicle to any purchaser and to transfer the vehicles from one stockyard to another. Even the Assistant Commissioner found that on some occasions, vehicles had been moved from a stockyard in one State to a stockyard in another State. It is not possible to comprehend how in the above situation it could be held that the movement of the vehicles from the works to the stockyards was occasioned by any covenant or incident of the contract of sale. As regards the so-called firm orders it has already been pointed out that none have been shown to have existed in respect of the relevant periods of assessment. Even on the assumption that any such orders had been received by the appellant they could not be regarded as anything but mere offers in view of the specific terms in exhibit I (the dealership agreement) according to which it was open to the appellant to supply or not to supply the dealer with any vehicle in response to such order. What was, therefore, relevant was the acceptance of firm orders occasioning the movement of vehicles out of the State of Bihar." The only distinguishing fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dily inferred that the inter-State movement was occasioned only in the course of fulfilment of a pre-existing contract with an identified buyer. As pointed out by the Supreme Court in TELCO's case [1970] 26 STC 354; [1970] 1 SCC 622, from the fact that the appellant took into account the overall requirements of prospective buyers (which it naturally was expected to do) before manufacturing and despatching the vehicles, the inference of inextricable link between the movement and the prior contract cannot be drawn, without anything more. It is especially so where the goods (chassis) are moved in much lager numbers than what are required to fulfil the prior contracts of sale and secondly, the same type of goods moved were delivered not only to institutional buyers but also other buyers who did not place orders before-hand. The despatched goods may or may not be delivered to the party with whom there is a contract and the non-delivery may not result in breach of contract. Or, there is no knowing at the time of movement how many will be delivered to the customers having prior orders and how many to other customers or dealers who would not have placed firm orders. In such situations, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudice. On going through the record it appears that learned assessing officer has rightly held that the sales worth Rs. 87,39,46,760 to be the sales under section 3(a) and not stock transfer. On perusal of assessment order it shows that the assessing officer intended to examine all the sale statements of entire RSOs. He also examined the sale statements which were made available to him and recorded his findings in accordance with facts and law. It was in the light of these scrutinize and examination, the assessing officer held the sales worth Rs. 87,89,48,760 to be sales taxable under section 3(a). But, assessment order also shows sales statement of some RSOs were not made available to him, such as RSO, Aizol, RSO, Dimapur, RSO, Agartala, RSO, Shillong, etc. As such the assessing officer was left with no option but to take recourse to best judgment. In doing so, he has taken a moderate view of disallowing stock transfer to the tune of 15 per cent which comes to Rs. 85,93,44,215. We do not find any error in the findings of the assessing officer and also the appellate authority who confirmed the assessment order on these points." As regards the middle para in the above ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l aspects necessary to determine the crucial points, though such documents are not new. The substantial points raised by the appellant have not been gone into either from factual or legal angle by the appellate authorities. Even the assessing authority did not deal with the contentions of the appellant except in a sketchy manner. This authority should at least have the benefit of findings on facts and reasoned discussion of the points at issue. It is only then that this authority would be in a better position to deal with the matter so as to serve the ends of justice. In order to avoid delay, we are therefore remanding the matter to the Tribunal instead of the assessing authority. As far as the sales effected through RSO ,Vijaywada are concerned, no exception can be taken to the finding of the assessing authority that the vehicles sold to APSRTC were in the nature of inter-State sales. Specific models suitable only for passenger buses as per the specifications given by the Corporation were manufactured and delivered month after month. The learned counsel for the appellant has fairly stated that it has no case in respect of sales effected to APSRTC. The appeal is therefore dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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