TMI Blog2016 (12) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ating both the petitioners as distinct legal entities and treating the inter units transfer of cotton and cotton yarn to the transferee, cannot be treated as sale transaction and the finding that merely, because there are two TIN numbers to treat both the units as separate units and the finding rendered by the respondent in this regard is wholly untenable. Petition allowed - decided in favor of petitioner. - WP.Nos.28365 of 2013 and 12211 of 2014 M.P.Nos.1 & 2 of 2013 and 1 & 2 of 2014 in W.P.No.28365 of 2013 M.P.No.1 of 2014 in W.P.No.1211 of 2014 - - - Dated:- 8-11-2016 - T. S. Sivagnanam, J. For the Petitioner : Mr. N. Prasad For the Respondent : Mr. K. Venkatesh, GA ORDER Heard Mr.N.Prasad, learned counsel for the petitioner and Mr.K.Venkatesh, learned Government Advocate for the respondents and perused the materials placed on record, including the written instructions given by the Assessing Officer to the learned Special Government Pleader, vide letter dated 19.12.2014. 2. The short issue, which falls for consideration is, whether the petitioners herein, which are two units of National Textile Corporation Ltd., could be treated as two different enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment or other valuable consideration. It was stated that transfer of cotton and cotton yarn only to their own unit, which is an unit of National Textile Corporation Ltd. 6. The petitioners stated that they are the units of National Textile Corporation Ltd., which is a limited company, having different units and the units are located all over India in the southern region and the names of fourteen units were furnished. Copy of the Annual Report for the year 2011-2012 was filed, wherein, the list of mills under the operation of National Textile Corporation Ltd. is given as annexure-A and the details were also extracted in the explanation. Further, it was submitted that National Textile Corporation Ltd., as whole has been assessed to income tax as single unit and other Government departments like Department of Company Affairs, Joint Directorate of Foreign Trade, Ministry of Commerce, etc. have considered all the units of National Textile Corporation Ltd. as single entity. Further, it was submitted that they were assessed to sales tax as a single unit, till 31.03.2011. 7. Further, the petitioner contended that due to different locations of the unit in Tamil Nadu, they had applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made into cloth and admittedly cloth is an exempted commodity. Therefore, the interpretation given by the respondent is flawed, because of applying of the wrong test to the facts of the case. 11. Furthermore, there is no other discussion to substantiate the finding that the transaction should be treated as sale. When there is nothing to show that the basic elements to term the transaction as sale, in terms of the definition of sale, as defined under Section 2[33] of the Act were not fulfilled, the transaction could not have been treated as sale. There is no other material in the hands of the Assessing Officer, to come to such a conclusion that the transaction is sale, merely because the units have separate registration numbers. 12. In K.C.P. Limited [supra], somewhat an identical issue arose for consideration and the Hon'ble Division Bench pointed out that the registration certificate obtained by each branch or unit may, at best show, that they are separate assessable entities and it has no bearing on the question, whether they are distinct and different legal entities capable of transferring property in goods from each other. Further, it was pointed out that separate reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinct and different legal entities capable of transferring property in goods from each other. It is to be noted in this context that the language used in the provision defining sale , either under the APGST Act or the CST Act is not from one registered dealer to another , but by one person to another. Separate registration certificates issued to the units or branches of an unincorporated company have never been considered to be sufficient to confer the legal personality on such units and branches. 13. As pointed out in the above decision, registration under the Sales Tax Act does not necessarily mean that the registered dealer becomes a separate legal entity different from its creator, namely, the company proper. In the instant case, there can hardly be any doubt on this issue, because the registration certificate issued to both the petitioners mentions that they are units of National Textile Corporation Ltd. This being not in dispute, ought not to have been brushed aside by the respondent. 14. In K.C.P. Limited [supra], apart from rendering the above finding, there was reference to another decision of the Division Bench of Kerala High Court. It would be more apt to ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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