TMI Blog2015 (3) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... r Forest Produce (Regulation of Trade in Abnus Leaves) Rules, 1970 which are applicable to the tender issued by the seller. - The tender schedule, as issued by the seller, also stipulates that the purchaser should remove the stocks from the godowns within 30 days of issue of delivery orders failing which the purchaser will have to pay the godown rent and other expenses on watch and ward, insurance etc. Further, the period for which the stocks remain in the godown, the seller shall not be responsible for any deterioration in the quality of `Beedi' leaves during the storage in godown. Based on the aforementioned stipulations, it is clear that the delivery of the goods is complete at the godown of the seller on payment of the amount of the agreed consideration. It can be inferred that the events of sale of goods by the seller and the movement of goods from the State of Andhra Pradesh to another State are not inextricably connected and independent of each other. There is no incident of direct sale between the seller and the head office of the respondent-Company in the State of Maharashtra. It is the branch office that purchases the goods and receives them subsequent to payment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipating in the auction conducted by the Forest Department, Government of Andhra Pradesh (for short, the seller ). After the purchase, the assessee had dispatched the said `Beedi' leaves to the head office in the State of Maharashtra. Subsequently, the branch office of the respondent-Company claimed an exemption on its gross and net turnover of ₹ 1,07,51,740/- and ₹ 1,01,35,636/- for the said assessment years on the ground that the aforesaid transaction is in the nature of inter-State sale and therefore, is not exigible to tax under Entry 18, Second Schedule of the Act. 4. The Commercial Taxes Officer, Kamareddy (for short, the CTO ), by its orders dated 11.03.1992 and 31.07.1993 in G.I. No.646/1989-90 and G.I. No.646/1992-93 respectively, has rejected the claim for exemption made by the assessee and held that the sale is a single point sale where assessee was the final purchaser within the State and thus, the taxable event took place in the State. 5. Being aggrieved by the said order(s) passed by the assessing authority, the assessee had carried the matter(s) in appeal before the First Appellate Authority, i.e., the Appellate Deputy Commissioner, Secunderab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desh between the seller and the assessee. Therefore, the Revisional Authority has come to the conclusion that the transaction is liable to tax under the Act and set aside the order of the First Appellate Authority and consequently, restored the order passed by the CTO, dated 23.02.1996. 8. Aggrieved by the order so passed, the Assessee had approached the High Court by way of Special Appeal No.27 of 1996. The High Court has observed that the goods in the present case were purchased for the purpose of transport to the head office of the respondent-Company situated in the State of Maharashtra, the same being implicit in the agreement of purchase itself that the goods had to be transported and utilized in the State of Maharashtra, and thus, the sale qualifies as an inter-State sale of goods. Therefore, the High Court has concluded that the Revisional Authority was not justified in revising the order of remand/assessment passed by the First Appellate Authority and while allowing the appeal, has held that the respondent herein was not excisable to tax for the assessment year 1989-1990 under the Act. 9. Aggrieved by the aforesaid judgment and order passed by the High Court, the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice in the State of West Bengal, that is, outside the State of Orissa where the buyer is situated and the auction was conducted. The purchaser was neither situated in the State of Orissa nor registered as a dealer under the West Bengal Sales Tax, 1994. Since the place of business of all entities of the assessee were located outside the State of Orissa, the Court considering the same held that the sale was inextricably connected to the transportation of the goods outside the borders of the State of Orissa so as to render the sale transaction complete and therefore, was an inter-State sale. In the instant case, the assessee-branch office situated in the State of Andhra Pradesh is a registered dealer under the Act and has participated in the sale transaction as the purchaser of goods from the seller. It is only subsequent to the payment and delivery of goods, the assessee transports them to the head office of the respondent-Company in the State of Maharashtra. The sale transaction concludes between the State Department and the auction purchaser as and when the payment is made by the latter and the incidence of transport has no link to the already concluded sale transaction. 16. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale and the movement of goods and the sale must be inextricably connected. 20. In view of the above, it would be beneficial for us to notice the decisions wherein this Court has laid down the principles pertaining to inter-State sale. The Constitution Bench of this Court in Cement Marketing Co. of India (P) Ltd. v. State of Mysore, (1963) 3 SCR 777, inter alia, noticed the that in order for a sale or purchase to be considered as `Inter-State' it would be essential that there must be transport of goods from one State to another under the said contract of sale or purchase. The Constitution Bench, vide a detailed judgment, in support of the aforesaid principle of law, observed as follows: 11. In Endupuri Narasimbam v. State of Orissa, it was held in the case of sales covered by Article 286(1)(b) that only sale or purchase of goods which occasions the export or import of the goods out of or into the territory of India were exempt from the imposition of tax on the sale or purchase of goods and in regard to prohibition against imposition of tax on inter-State sales the test, it was said, was that in order that a sale or purchase might be inter-State it is essential that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its branch office, it ought to be considered merely as a transfer of stock from the registered office to the branch office. This Court relied upon its earlier decision in the case of English Electric Company of India Ltd. v. Deputy Commercial Tax Officer, (1976) 4 SCC 460, to observe that when the movement of the goods from one State to another is an incident of a given contract it is an inter-State sale, and what would be decisive is whether the given contract of sale is one which occasions the movement of goods from one State to another. 23. This Court, in Sahney Steel and Press Works Ltd. case (supra), held as follows: 8. ...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 a conduit through which the goods passed on their way to the buyer. It would have been a different matter if the particular goods had been despatched by the registered office at Hy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s registered as a dealer under the Act as well as the CST Act. In determining the question whether the transaction therein was an inter-state sale or a `branch-transfer', this Court referred to Sections 3(a) and 6-A of the CST Act and held as under: 23. It is an accepted position in law that a mere transfer of goods from a head office to a branch office or an inter-branch transfer of goods, which are broadly brought under the phrase branch transfers cannot be regarded as sales in the course of inter-State trade, for the simple reason that a head office or branch cannot be treated as having traded with itself or sold articles to itself by means of these stock transfers. 27. In view of the aforesaid settled principles of law, inter-branch transfers or transfers between the head office and a branch office cannot be considered as inter-State sale as contemplated under the CST Act. 28. Having noticed the aforesaid, we now turn to the facts of the present case to determine whether the transaction in question is an inter-State sale liable to tax under the CST Act or a sale transaction exigible under the provisions of the Act. 29. In the instant case, the Assessee-herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the State of Andhra Pradesh. The movement of goods from the godown takes place at the instance of the purchaser. The final destination of the consignment and the route or destination of the goods by the seller is inconsequential to the sale transaction. 33. In view of the above discussion, it can be inferred that the events of sale of goods by the seller and the movement of goods from the State of Andhra Pradesh to another State are not inextricably connected and independent of each other. There is no incident of direct sale between the seller and the head office of the respondent-Company in the State of Maharashtra. It is the branch office that purchases the goods and receives them subsequent to payment made by it to the seller and thereafter, transfers it to the head office of the respondent-Company in the State of Maharashtra. The incidence of sale is complete once the purchaser, that is, the branch office renders the payment for the goods. Once the sale transaction concludes in the State of Andhra Pradesh only, the mere transport of goods from branch office in Andhra Pradesh to the head office in Maharashtra would not result in an inter- State sale. Therefore, the sale or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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