TMI Blog2010 (7) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of 2007, 16783 of 2007, 16785 of 2007, 16787 of 2007, 16788 of 2007, 16790 of 2007, 8996 of 2010, 2054 of 2008, 7018 of 2009, 2052 of 2008, 2053 of 2008. It is averred in Writ Petition No. 12790 of 2008 that the petitioners are registered dealers in Madhya Pradesh and they purchased tendu leaves (tendupatta) sold by the M.P. State Minor Forest Product (Trading and Development) Cooperative Federation Limited (hereinafter referred to as, the Federation ). They are also registered under the M.P. Tendupatta Vyapar Viniyaman Regulation, 1966 to sell tendu leaves in other States in the course of inter-State trade and commerce after paying the prescribed registration fee. They are also registered as exporters and they are required to sell tendupatta in the course of inter-State trade and commerce also. They are also registered under the M.P. Commercial Tax Act and Central Sales Tax Act as dealers. Entry No. 5 in Part III to Schedule II of the VAT prescribes payment of 25.30 per cent of tax on tendupatta. In case sale is within the State the said tax is paid to the State and in case it is inter-State trade and commerce then the Central sales tax is required to be paid in absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued. Acceptance letter (P4) was also issued on December 5, 2005. The purchaser agreement (P5) dated December 19, 2005 was also entered into. The work order (P6) was issued. The petitioner has submitted form 27C for not collecting the TDS from the petitioner. Alternatively, it is submitted that the petitioner could have been held liable for tax under the M.P. VAT Act, 2002 and not under the M.P. Commercial Tax Act, 1994 as the work orders were issued after April 1, 2006. In the return filed by the respondents which has been adopted in other writ petitions also, it is contended that the inter-State sale has been defined under section 3 of the Central Sales Tax Act. The transaction in question is intra-State sale. Reliance has also been placed on section 4 of the Central Sales Tax Act, 1956 which provides that when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. From the purchase agreement, it is apparent that it is not the case of inter-State sale. The movement of goods is not incidental to the sale. There was no condition expressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be of inter-State sale. Inter-State sale has been defined in section 3 of the Central Sales Tax Act, 1956. Section 3 is quoted below: 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) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation 1: Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2: Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State. It is necessary that the sale or purchase transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 SC 980, the apex court has laid down the tests to bring a sale within the inter-State sales which provide that the transaction must involve movement of goods across the border. Transactions are inter-State in which as a direct result of such sales the goods are actually delivered for consumption in another State. A contract of sale must involve transport of goods from one State to another under the contract of sale. On the facts, it was found that the contract itself involved the movement of goods from the factory to the purchaser, i.e., across the border from one State to another because the factories were outside the State of Mysore and, therefore, the transactions were clearly transactions of sale of goods in the course of inter-State trade or commerce. In Singareni Collieries Co. Ltd. v. Commissioner of Commercial Taxes, Hyderabad [1966] 17 STC 197 (SC); AIR 1966 SC 563, the assesseecompany in Andhra Pradesh supplied coal to allottees outside the State pursuant to the directions of Coal Commissioner issued under the Colliery Control Order, 1945 and it was held to be a transaction to be that of interState sale. In the said case, the coal was transported from the colliery o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 147-149 of 27 STC): 6. In Bengal Immunity Company Limited v. State of Bihar [1955] 6 STC 446; AIR 1955 SC 661; [1955] 2 SCR 603, Venkatarama Ayyar, J., observed that a sale could be a sale in the course of inter-State trade only if two conditions concur: (1) a sale of goods, and (2) a transport of those goods from one State to another under the contract of sale. . . . 10.. In Ben Grom Nilgiri Plantation Co., Coonoor v. Sales Tax Officer, Special Circle, Erunakulam [1964] 15 STC 753 (SC); [1964] 7 SCR 706, this court had to consider what sales are sales in the course of export and what sales are for the purpose of export. In the course of the judgment, Shah, J. (one of us) observed: 'A sale in the course of export predicates a 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 of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he terms of the contracts of sale, the purchasers were required to remove the goods from the State of Bihar to other States. Hence the sales with which we are concerned in this case must be held to be sales in the course of inter-State trade or commerce. In Oil India Ltd. v. Superintendent of Taxes [1975] 35 STC 445 (SC); [1975] 1 SCC 733, the construction of pipeline was undertaken by the petitioner in pursuance of the agreement and that was for the specific purpose of transporting crude oil to Barauni from Assam. On facts, it was held that there should be movement of goods from the State of Assam to the State of Bihar in pursuance to the contract of sale. In other words, the movement of crude oil from the State of Assam to the State of Bihar was incidental to the contract of sale. The inter-State movement must be the result of a covenant express or implied in the contract of sale or an incident of the contract. It is not necessary that the sale must precede the interState movement in order that the sale may be deemed to have occasioned such movement. It is not necessary for a sale to be deemed to have taken place in the course of inter-State trader or commerce, that the coven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf 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. If the movement of goods from one State to another is the result of a covenant or an incident of the contract of sale then the sale is an inter-State sale. In Commissioner of Sales Tax v. Bakhtawar Lal Kailash Chand Arhti [1992] 87 STC 196; [1992] 3 SCC 750, the apex court laid down the requirement of inter-State sale to be a movement of goods from one State to another. It must be a case of cause and effect; cause being the sale/ purchase and the effect being the movement of goods to another State. To fall under section 3(a) of the Central Sales Tax Act, the sale and the movement of goods must be parts of the same transaction. A sale which occasions the movement of goods from one State to another is a sale, in the course of the inter-State trade, no matter in which State the property in the goods passes. Even if the goods move in pursuance of an agreement of sale and the sale is completed in the State in which the goods are received, it will be an inter-State sale. Further, it is immaterial whether a completed sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of export outside India, he may, if he so elects and on furnishing the requisite papers in support thereof, tender the security deposit in the form of bank guarantee (BG) to the extent of 20 per cent of the full sale value of the stock purchased in the prescribed form valid for a period of not less than one year and the said BG shall be released after finalisation of the export deal. The aforesaid clause 3.13 mainly clinched the issue in the said decision. It is contemplated in the agreement itself which was entered into between the parties that the security deposit of 25 per cent of the full purchase price was to be furnished in case the tenderer wants to purchase for the purpose of export outside India. Besides that there were transit passes which were issued, income-tax form was also issued under section 206C of the Income-tax Act and the challan was also prepared. However, what tilted the balance on facts in the said case is the existence of the aforesaid agreement which envisaged the inter-State sale as provided in clause 3.13. The apex court has reiterated the law that in order to decide whether the sale is inter-State, it is sufficient that the movement of goods coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired the aforesaid information to be submitted along with call deposit receipt number about the validity of the tender and penalty applicable in case of failure to abide by the conditions of the tender. Pursuant to the terms and conditions of purchase agreement (P5), the purchaser shall have to purchase bamboos up to the quantity mentioned in Schedule I or such lesser part of it, as may be offered to him by the Corporation or by its officer during the period ending June 30, 2006 at the rate specified. The purchaser shall take delivery of cut and collected bamboos. The purchaser is required to furnish bank guarantee for the amount equivalent to 10 per cent of the total purchase price of the notified quantity of bamboos as per clause 9(i) of the tender notice from any nationalised bank as security in the prescribed form which will be issued by the bank in favour of concerned RGM for the due performance and observance of the agreement. Bank guarantee should be for a period up to October 31, 2006. Remaining amount is to be paid in instalments within 120 days. It was also a stipulation that in addition to the purchase price, the purchaser shall pay the commercial tax, forest development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [2007] 7 VST 214 (SC); [2007] 9 SCC 97 which contemplated export outside India and security to be furnished of the full amount. On facts of the said case, their Lordships have given the finding and in each case it is a question of fact to be determined on the basis of settled principles of law. Coming to the agreement entered into in the case of purchase of tendupatta, the factual position remains the same with respect to interState movement of goods and with respect to the bamboos. We find certain orders have been placed on record by some of the petitioners/exporters of Madhya Pradesh which were, obtained by them from outside the State of Madhya Pradesh but they are also running their business in the State of Madhya Pradesh. What is of utmost significance whether the movement of tendupatta has taken place pursuant to the transaction in question or one incidental thereto or formed inseparable part. Our answer is in negative. Merely by issuance of transit passes to the purchasers, in our opinion, it would not be a case of inter-State sale. The purchase agreement (P5) contained in Schedule IV in the case of sale of tendu leaves provides the detail, method of sale, deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X
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