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Kalinga Auto Centre Pvt. Ltd. Versus State of Odisha

2016 (6) TMI 654 - ORISSA HIGH COURT

Sales Tax / VAT liability in Odisha - inter-State sale or local sale - The report says that 176 numbers of cars have been procured from its branch office at Mumbai and sold to consumers at Odisha - According to the petitioner, no sale of such cars takes place in Cuttack because a customer desirous of purchasing Padmini car from the Mumbai under direct billing system, gives a letter of authorization in favour of the branch office situated at Mumbai to receive and to appoint a Transporter to drive .....

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act, it is truely an inter-State sale.

The facts and circumstances of the above case are very much applicable to the facts and circumstances of the present case and accordingly we are not refrained from observing that the transaction in the present case is inter-State sale. - Decided in favor of assessee. - STREV No. 60 of 2011 - Dated:- 22-9-2015 - I. Mahanty and D.P.Choudhury, JJ. For Petitioner : M/s. S. Kanungo, Ch. S. Mishra, R.N.Patnaik, N.R.Mohanty, N.K. Nanda and Ch. H. Satpat .....

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sories being authorized dealer of car produced by M/s. Premier Automobiles Ltd., Mumbai. For carrying on its business, petitioner has three branches; one at Cantonment Road, Cuttack, Odisha; at Bhubaneswar, Odisha and at Mumbai, registered with STOC 150, Ghatkopar Division, New Mumbai. Petitioner, at its Cuttack Branch used to sell other automobile vehicles, namely, Hero Honda motorcycles, components, accessories and spare parts of Premier cars for which it has already paid tax to the Sales Tax .....

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r. The report says that 176 numbers of cars have been procured from its branch office at Mumbai and sold to consumers at Odisha. According to the petitioner, no sale of such cars takes place in Cuttack because a customer desirous of purchasing Padmini car from the Mumbai under direct billing system, gives a letter of authorization in favour of the branch office situated at Mumbai to receive and to appoint a Transporter to drive down the vehicle from Mumbai to the destination mentioned in the let .....

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r-company. Then the Mumbai branch intimates the petitioner-company over telephone or FAX with regard to the chasis number and engine number of the vehicle received in the name of the customer. Then the branch of petitioner-company in Odisha informs the customer about the consignment of the vehicle from Mumbai to Odisha and asked the petitioner to prepare insurance cover note for transporting and driving down the vehicle from Mumbai to the place of destination. 3. It is also alleged, inter alia, .....

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( C.S.T. Act in short) and the same is not a intra-State transaction. After verifying the books of accounts and hearing the matter from the petitioner, the Sales Tax Officer without any valid reason, added ₹ 3,99,05,248.81 paise with the gross taxable turn over of the petitioner taking the sale of 176 numbers of cars as intra-State sale. Thereafter the petitioner preferred appeal under sub-section 1 of Section 23 of the Act raising several grounds to support its claim. The First Appellate .....

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000 and the Tribunal after hearing both the parties and relying upon the decisions of the Hon ble Supreme Court in the case of Balabhagas Hulschand v. State of Orissa, AIR 1976 SC 1016 vide order dated 28.12.2010 held that the said transactions are not inter-State transactions and are intra-State transactions for which the above amount said to be deleted, should be added to the gross turn over and fresh assessment should be made. Against that order, petitioner preferred the present revision to s .....

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om the manufacturer at Mumbai and sends the same to registered office at Cuttack for fitting of accessories, preparation of documents and then hands over the motor car to the customer. The customer s cheque is directly issued to the Mumbai office of the petitioner where the manufacturer takes order and delivers the vehicle to its Mumbai office. The petitioner only receives the cars and makes some accessories fitted and delivers the cars to customers with the documents of the cars. So he submitte .....

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Act for distribution of such cars is payable by the petitioner as it is an inter-State sale being exigible under Central Sales Act. So he submitted to set aside the order of the learned tribunal, impugned herein. 6. Learned counsel for the opposite party-State submitted that the Tribunal has discussed all the points and in the peculiar fact and circumstances of the case, rightly had held that it is not a case of inter-State sale but is a case of intra-State sale. According to him, learned Tribu .....

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the law of agency having operated in full force, it is intra-State sale. He further stated that according to illustration at II-A given in the decision reported in Balabhagas Hulschand (supra), the sale by the petitioner, is outright intra-State sale inasmuch as the Mumbai branch of the petitioner purchased the goods and removed the goods to Cuttack for sale. He submitted that the decision reported in Rolta Motors Ltd (supra), Sahney Steel and Press Works Ltd. (supra) and English Electronic Comp .....

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bmissions made by the learned counsel appearing for the respective parties. Perused the record. It is undisputed fact that the petitioner is a registered dealer of premier padmini cars along with other vehicles. It is undisputed fact that the premier padmini cars are manufactured by M/s. Premier Automobiles Ltd., Mumbai. It is admitted fact that the petitioner has got its registered head office at Cuttack but has branch office at Mumbai and Bhubaneswar, and the cars are purchased by the petition .....

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er has not disclosed the sale of 176 nos of cars while submitting report but showed only sale of Hero Honda motorcycles and other automobile vehicles. There is also report from the Sales Tax Officer (Intelligence) that the petitioner has suppressed the money showing sale of 176 nos. of such cars in 1995-96. Learned Assessing Officer held that the car being a movable property, cannot be sold completely unless the delivery of car is handed over to the customer. According to him, placing of order w .....

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d documents to show as to give its transaction of cars of inter-State in nature instead of intra-State. 11. First appeal was preferred before the Assistant Commissioner of Sales Tax (ACST in short). After hearing, learned ACST observed that during 1995-96, 176 nos. of cars have not been included in the turn over by arraying the same as sale of cars as the same was under inter-State trade. He verified the documents again and found that the Mumbai branch of the petitioner has effected purchase of .....

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copies of the documents, he observed that the customers have actually placed orders before M/s. Kalinga Auto Centre (P) Ltd., erstwhile Bombay and through demand draft in favour of Bombay branch, sale invoices were raised by the Bombay branch in the name of respective customers. He further held that simply receiving orders from customers and giving delivery after pre-delivery servicing as per their agreement by the Cuttack branch cannot alter the position. Thus he found the transaction is purel .....

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ssed the following order : xx xx xx In the back drop of above law if the facts in the hand are considered, we are of the considered view that the branch office at Bombay was not a authorized dealer of M/s Premier Auto Mobiles Limited, Bombay. Whatever purchase he had made, it was on behalf authorized dealer which was the respondent having head office at Cuttack. Both the registered office and the branch office were offices of the same company and they did not possess separate juridical personali .....

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te having no disputed other concessions, we are to only consider the effect of our fining that the transaction is intra state sale, in the impugned judgment. The Id. ACST has excluded ₹ 3,99,05,848.61 from the gross turnover and the taxable turnover of the appellant towards the sale price of 176 nos. of car vide para-4 of the impugned order. The said amount is now to be included and the consequential assessment is to be done. 13. From the above observation of the learned Tribunal, we are o .....

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ra) would apply to the present case. 14. We have gone through the decision of the Balabhagas Hulschand (supra). In the said judgment, following three illustrations have been given by their Lordship. Case No.I-A is a dealer in goods in State X and enters into an agreement to sell his goods to in State X. In pursuance of the agreement a sends the goods from State X to State Y by booking the goods in the name of B. In such a case it is obvious that the sale is preceded by the movement of the goods .....

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een that in this case the movement of goods is neither in pursuance of the agreement to sell nor in the movement occasioned by the sale. The seller himself takes the goods to State Y and sells the goods there. This is therefore, purely an internal sale which takes place in State Y and falls beyond the purview of section 3(a) of the Central Sales Tax Act not being an inter-State sale. Case No.III-B a purchaser in State Y comes to State X and purchase the goods and pays the price thereof. After ha .....

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ent case is not coming within any of the illustrations as given by their Lordships in the above judgment, because in the present case, the customers booked the vehicles to purchase the same from the petitioner s branch office at Mumbai who purchased the vehicles from the manufacturer, M/s. Premier Automobiles Ltd., Mumbai, sent the vehicles to its head office at Cuttack and the customers took delivery of the same from Cuttack. The customer has no link with the manufacturer but has placed orders .....

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ale in the course of inter-State sale. It does not matter in which State the property in the goods passes. What is decisive is whether the sale is one which occasioned the movement of goods from one State to another the inter-State movement must be the result of a covenant, express or implied in the contract of state or an incident of the contract. It is not necessary that the sale must precede the inter-State movement in order that the sale may be deemed to have occasioned such movement. It is .....

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to the above decision, we find that the present fact and circumstances is covered by the facts of the aforesaid decision and we have no hesitation to hold that this is an incident of contract where the vehicle is being booked from the Cuttack office of the petitioner by the customers directly to its branch offfice at Mumbai and the Mumbai office after procuring the same, sends the vehicle to the Cuttack office where the customer takes delivery of the same. When the vehicle is sent from one State .....

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the course of fulfillment of the contract of sale. Even if the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales dispatching, billing receiving of the sale price, the conclusion must be that the order placed by the buyer is an order placed with the company, and for the purpose of fulfilling that order the manufactured goods commence their jour .....

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al personalities. The question really is whether the movement of the goods from the registered office at Hyderabad is occasioned by the order placed by the buyer or is an incident of the contract. The answer being in the affirmative, its movement from the very beginning from Hyderabad all the way until delivery is received by the buyer is an interstatement movement. 1.3 The fact that the goods were dispatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not .....

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the buyer. 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. The movement of the g .....

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ere their Lordships observed in the following manner : that the expression sale or purchase occasions the movement of goods means that either the contract of sale itself should provide for the movement of goods or the movement of goods must be incidental to the contract, there being no possibility of diversion of goods for any other purpose or to any other State. The Tribunal found that appropriation of the goods and delivery under the direct billing system took place at Haryana, that there were .....

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Odisha State and it is an incidental to the contract. 21. Section 3 of the C.S.T. Act is quoted herein 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 f .....

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