TMI Blog2010 (3) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... kata, to estimate the demand for different kinds of steel products from different branch areas and to advise a suitable production programme to steel plants. In the preamble to the TBS Scheme, it is stated that the scheme is based on a commitment on the part of SAIL to meet the demands of customers and supply the material against confirmed orders within a time schedule. Broadly, the scheme envisages registration of demands from the eligible customers for a quarter, making suitable allotments and offering and delivering the products at the specified price through branches. The Branch Sales Office (BSO) after compiling the demands under the TBS Scheme and other schemes prepare the forecast and send it to the Central Production Planning Department (for short, the CPPD ) through its regional office. The CPPD and regional office finalise the branch-wise despatch programme and send the same to the plants. The plants, on manufacturing the goods, despatch them to different branch sales offices as advised by CPPD. On receipt of the material mostly by rail, the BSO sends communications to the customers to deposit the sale price and take delivery of the goods. At that stage, according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w by the Supreme Court in its various pronouncements has been explained in those decisions. We quote relevant passages therefrom (at pages 228 and 229 of 13 VST): Section 6 of the CST Act which is the charging provision ordains that subject to the other provisions of the Act, every dealer shall be liable to pay tax on all sales of goods (other than electrical energy) effected by him in the course of inter-State trade or commerce. Under article 269(3) of the Constitution of India, the Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce. It is under entry 92A of List I of the Seventh Schedule to the Constitution that the Parliament derives exclusive power to legislate on the subject of 'tax on the sale and purchase of goods (other than newspapers) taking place in the course of inter-State trade or commerce'. The Parliament, therefore, enacted the Central Sales Tax Act, inter alia, providing for levy and collection of tax on the inter-State sales or purchases of goods. Section 3 of the CST Act by a deeming provision lays down when a sale or purchase of goods takes place in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on their way to the buyer, it still becomes an inter-State sale. The registered office and branch office do not posses separate juridical personalities (vide Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301 (SC) and English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 (SC)) In the case of Tata Motors Ltd. [2009] 24 VST 167 (CSTAA), some more relevant decisions of the Supreme Court have been cited. As they have some bearing on the facts of the present case also, we quote the following passages therein (page 174): Then in the case of Tata Engineering 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case, the goods were dispatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not by the registered office at Hyderabad. In our opinion, that makes no difference at all. The manufacture of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an incident of the contract entered into with the buyer, for it was intended that the same goods should be delivered by the branch office to the buyer. There was no break in the movement of the goods. The branch office merely acted as conduit through which the goods passed on their way to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock transfers and not inter-State sales. In other words, he was of the view that the movement of goods from Rourkela to other branches was occasioned or triggered by pre-existing contracts of sale. But, in order to rebut the initial presumption arising from the F forms filed by the dealer, there must be relevant and cogent material. The assessing authority cannot act on a surmise or broad generalization. That is what happened in the present case partly on account of proper response from the appellant's side. We shall now advert to the findings of the Tribunal. The Tribunal noted that the appellant failed to produce all the documents relating to the despatches under TBSS inspite of giving an opportunity and therefore, the assessing authority analysed the documents pertaining to one customer, i.e., Mechanical Wire Industries, Calcutta, which were produced before it and rejected its claim on the ground that the documents did not co-relate with each other. Then, the Tribunal, after briefly referring to the features and modalities of TBS (Status A Customer) Scheme observed, thus: On examination of the facts mentioned above, the following elements are forthcoming, (i) there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis for the finding of the Tribunal that the agreement to sell was formed with the issuance of offer letter. It is pointed out that the initial offer letter is not really in the nature of offer but only an intimation of the allotment of lesser than registered quantity. The offer letters were issued only subsequent to the despatch of the goods from the plants and mostly after the wagon reached the destination in the other State. It is pointed out that the inextricable link between the contract of sale and the inter-State movement of goods is missing and has not been established by the assessing authority in order to shift the burden to the assessee. It was not possible to say at the point of commencement of inter-State movement that the particular consignments were earmarked for sale to an identified party or parties. There were no firm offers, much less contracts of sale at that time. There was no co-relation between despatches, orders on hand and sales at that stage. It is further submitted that not only all the documents relating to the transaction with Mechanical Wire Industries were filed but certain other documents relating to sales to other parties like Flakt India Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rather than any concrete material/evidence. It must be noted that the goods are not tailor-made but they are of standard make and it is an undeniable fact that the production programme goes on based on assessment of market demand in general rather than to cater to the requirements of particular customers. In the case of standard goods which are manufactured and despatched in bulk, it cannot be readily assumed, unless there is definite indication to that effect that the goods are earmarked for sale for a particular customer at the time of despatch itself. There may be instances where the same type of material is required by or allotted to more than one customer and ultimately it might be difficult to predicate at the stage of despatch itself that these goods are meant to be sold in specified quantities to a particular customer whose indent may be pending. No doubt, the lack of knowledge on the part of the manufacturing unit which despatches the goods is not material and it would be sufficient if the Central Marketing Office or the Regional Office has the knowledge that the particular goods to be despatched by the plant are to be earmarked for a particular customer, and they cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 4, 1991 and it is out of the stock received in that wagon, 6.59 M/T was delivered to MWI on March 2, 1992. The wagon contained much more material of the same size and quality. The challan No. 14283 is mentioned in the wagon card and the delivery date is shown therein as March 2, 1992. Thus the delivery was effected and transaction was completed pursuant to the offer letter dated February 12, 1991 but not the earlier offer dated November 28, 1991/December 2, 1992 for a larger quantity. The appellant has described the earlier offer letter as really in the nature of pre-offer for the purpose of intimating the stock which the appellant would be able to supply against the demand registered by the appellant. The documents referred to above do establish that the offer letter which was acted upon was of the date February 12, 1992. The assessing authority observed that the offer dated February 12, 1992 contained in various documents did not tally with the original offer dated November 28, 1991/December 2, 1991. But the fact remains that the subsequent offer letter prevails as it was acted upon. The comment of the assessing officer that there was no co-relation cannot therefore be sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant material and issues, we are handicapped in deciding these appeals finally. The mere fact that there was certain amount of remissness or default on the part of the appellant to bring on record the relevant materials and to present an analysis of the transactions would not justify the rejection of the appeals straightaway. The fact remains that high stakes are involved and the appellant has paid tax on identical transactions in other States treating them as branch sales. It transpires that the analysis of a single typical transaction relating to Mechanical Wire Industries referred to by the assessing authority and the Tribunal does not lead to the inference of inextricable link between the inter-State movement of goods and the contract of sale, as discussed earlier. It has come to light in that case that the offer and sale had taken place only after the movement started and the goods reached the branch. But a single transaction is not conclusive of the issue to be decided in the appeals. Some other typical transactions for each year should also be analyzed and appropriate findings have to be reached. The other details relating to despatches, sales and the pending allotments for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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