TMI Blog2019 (2) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... t, it is the case of the Revenue that the appellant was asked to produce the purchase order for the year 2007-08, but the appellant did not produce any purchase order. The appellant should have produced purchase orders if they were in existence. But for that reason the Assessing Authority could not have used purchase order of Tata Steel to come to a conclusion that the branch transfer claim made by the appellant deserves to be rejected - Without even referring to M/s Omni Auto Ltd., the Assessing Authority has stated that it has considered the dispatch proof, consignment notes, F forms etc. produced by the appellant and after verification it has come to the conclusion that in spite of production of F forms, the claim of branch transfer is not allowable. Whether all this material was with respect to transactions with M/s Omni Auto Ltd. is not clear, because there is no reference to M/s Omni Auto Ltd.. It was necessary for the Assessing Authority to first lay a firm foundation by specifically referring to individual transactions with M/s Omni Auto Ltd. since the purchase orders were not before it. As already noted in Tata Engineering and Locomotive Co. Ltd. the Supreme Court has stre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere communicated to the appellant by letter dated 23.06.2009. The appellant was directed to revise its returns. The appellant did not file revised returns. The appellant did not file its say. The Deputy Commissioner of Sales Tax (LTU-10), Mumbai initiated assessment proceedings by issuing notice in Form VI-B under the CST Act for the period between 2006-07 and 2007-08. Through its senior executives the appellant produced its books of accounts, bills, declarations, dispatch proofs etc. in support of its claim of branch transfer. Show cause notices dated 18.12.2009 were issued to the appellant, calling upon the appellant to show cause as to why its claim of stock transfer to its own branch should not be disallowed and why proportionate tax should not be levied to the extent of disallowance of claims made by the appellant. It was also proposed to levy penalty u/s 9(2A) of the CST Act r/w Section 29(3) of the MVAT Act. The appellant filed written objections dated 30.12.2009, however, the Assessing Authority was not convinced with the submissions made by the appellant. He disallowed the appellant s claim of stock transfer to its own branch situated at Jamshedpur and instead trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04.2006 which was received earlier to comply with the order of M/s Tata Steel Ltd. ( Tata Steel for short). Therefore goods sold to Tata Steel in pursuance of the delivery schedule mentioned in the purchase order ought to be out of the stock. It cannot therefore be concluded that movement of goods from Maharashtra to the branch is occasioned as a result of the purchase order dated 26.04.2006. Counsel submitted that the purchase order contains conditions to which it is made subject to. Condition No. (2) is that supply to Ring Plant (Tata Steel Works) from Jamshedpur through CA on month-to-month basis as per their indents only and Condition No. (3) is that the CA must have facility to maintain one month inventory. Counsel submitted that these conditions show that supplies are to be made from the branch only from the stocks to be maintained for Tata Steel s requirements on month-to-month basis, by keeping the facility of maintaining stock for requirement of one month. Counsel contended that the branch was maintaining stock from which supplies were made as and when orders were received. This indicates that after placing of the purchase order, Tata Steel has placed monthly indents aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without jurisdiction. Counsel relied on M/s Jute Corporation of India Ltd. versus Commissioner of Income Tax and Another 1991 AIR 241 (SC) in support of his submission that the appellant was entitled to raise additional grounds in this appeal. Counsel also relied upon Tata Engineering and Locomotive Co. Ltd. versus Assistant Commissioner of Commercial Taxes 26 Sales Tax Cases 354 (SC) to contend that the Assessing Authority was bound to examine each individual transaction and then decide whether it constituted an inter-State sale exigible to tax under the provisions of the CST Act. Counsel submitted that the onus lies on the Department to dispute the contention of the assessee that it was an inter-State sale. In this connection, Counsel relied on Associates Cement Companies Ltd. versus State of Orissa [2008] 13 VST 90 Orissa . For general principles to be followed while determining the nature of transaction the Counsel relied on Siddhartha Apparels (P) Ltd. versus Secretary, Commercial Tax Department Chennai Others [2008] 13 VST 222 (CSTAA) . On the requirement of passing a reasoned order, Counsel relied on judgment of the Supreme Court dated 15.04.2010 In Civi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that it is true that the purchase order dated 26.04.2006 is for supply of goods worth ₹ 12,96,54,243.94 and it is for the period 2006-07. It is also true that the Assessing Authority has disallowed the entire branch transfer claim of ₹ 37,19,60,952/-. Counsel submitted that there is no illegality in this. Counsel submitted that at the time of assessment for the year 2006-07 branch transfer claim for full year was verified. Considering the nature of transaction, modus operandi of the appellant and the pre-existing purchase order of Tata Steel the total claim of branch transfer was disallowed. Counsel further submitted that even though in case of M/s Omni Auto Limited the proof of back-to-back sale is for March 2008, sale is effected to M/s Omni Auto Limited in the year 2006-07 also. Therefore it can be inferred that the despatches are as per pre-existing purchase orders received from M/s Omni Auto Limited. Hence total claim of ₹ 37,19,60,952/- is treated as inter-State sale. Counsel further submitted that both the assessment periods were audited simultaneously and findings of business audit were communicated to the appellant by letter dated 23.06.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder was received by the appellant s Jamshedpur branch from Tata Steel for the goods worth ₹ 12,96,54,243/-. In this purchase order Tata Steel has given the details of delivery date, quantity and specifications of the goods, delivery point etc. The delivery dates are from 26.04.2006 to 28.03.2007. This makes it clear that Tata Steel had placed order for the year 2006-07 on 26.04.2006. The notice, further, stated that the purchase order has been addressed in the appellant s name C/o branch office. In the sale bills raised by the branch on Tata Steel, the purchase order details have been mentioned which indicates that the sales have been effected in pursuance of purchase order dated 26.04.2006. The notice, further, stated that there are only 3 buyers to whom the appellant branch has effected sales during the year and the above facts are applicable to other buyers also. The notice further stated that the appellant is manufacturing special steel used for specific purposes. It can therefore be inferred that the appellant s branch is getting purchase order with specifications of required steel from the customers and it is forwarding them to the appellant. The notice further st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Tata Steel Works) from Jamshedpur, through CA on month to m nth basis as per indents only. iii) (Condition no. 3) CA must have facility to minimum one month delivery. iv) Condition no. 11) Material should confirm to our TDC and M/s Timken s corporate standard vide 3.1.23 Rev. Dated 16.5.2006. d) From the condition no. (1) and (2) it is clear that the customer has placed order on the dealer through the Branch. The customer has instructed to supply steel to Ring plant at Jamshedpur through the branch. e) On the sale bills raised by the branch, M/s Tata Steel Ltd. (the customer), the purchase order details have been mentioned. From the sale bills it is clear that the sales have been effected in pursuance of the purchase order dated 26.4.2006. f) It is thus clear that the movement of goods from Khopoli plant has commenced in pursuance of the P.O. from M/s Tata Steel Ltd. So the transaction is a predetermined sale and not Branch Transfer. g) It is found that there are only 3 buyers to whom the Branch has effected sales during the year. The above facts are applicable to other buyers also. h) The dealer has produced dispatch proof, consignment notes, F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law is therefore satisfied. It is not possible to accept the contention that the purchase order dated 26.04.2006 is only tentative requirement of the year to be followed by monthly indents and monthly indents can be treated as confirmed orders. The transactions have all the attributes of inter-State sale. This is clear from the purchase order. In this connection, reliance placed by the Tribunal on the judgement of the Supreme Court in M/s Hyderabad Engineering Industries versus State of Andhra Pradesh Civil Appeal No. 3/81 of 2003 is apt. The relevant paragraphs need to be quoted 32. From the above decisions, the principle which emerge is when the sale or agreement for sale causes or has the effect of occasioning the movement of goods from one State to another, irrespective of whether the movement of goods is provided for in the contract of sale or not, or when the order is placed with any branch office or the head office which resulted in the movement of goods, irrespective of whether the property in the goods passed in one State or the other, if the effect of such a sale is to have the movement of goods from one State to another, an inter-State sale would ensue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice nor in the assessment order the Assessing Authority has made any specific reference to any other buyers. In the show cause notice a vague statement is made that it is found that the Jamshedpur branch has effected sales only to 3 buyers during 2006-07 and the above facts are applicable to other buyers also. Names of the buyers are not stated. How the findings based on purchase order dated 26.04.2006 are applicable to these buyers is not stated. Again in the assessment order the same vague statement is made. From the contentions of the appellant recorded in the assessment order, it is clear that the appellant s stand was that it had submitted details only for the month of March, 2008. In other months, the branch has sold goods to other customers also and in case of these transactions during other months the vehicle number given on the consignment note and on the sale invoice raised by the branch are different. The Assessing Authority should have, therefore, dealt with the appellant s contentions, stated the names of the other buyers and further discussed how the appellant s transactions with them are inter-State sales and not made a vague statement based on purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts discovered by it about transactions with Tata Steel are applicable to the other buyers and that too without even naming those other buyers. If with respect to those transactions similar purchase orders were not available it was all the more necessary to discuss other available evidence. There should have been clarity on this aspect. Unfortunately, the Tribunal has not noticed this infirmity. In the circumstances so far as year 2006-07 is concerned, the disallowance of stock transfer claim of ₹ 12,96,54,243/- will have to be confirmed. Disallowance of stock transfer claim of ₹ 24,23,06,709/ will have to set aside and to that extent the matter will have to be remanded to the Assessing Authority to pass a fresh order after examining transactions covered by the said amount of ₹ 24,23,06,709/-. It is necessary now to turn to assessment for the year 2007-08. Show cause notice dated 18.12.2009 in respect of year 2007-08 stated that appellant s claim for stock-transfer of goods worth ₹ 32,24,63,898/- to its agent at Jamshedpur in the State of Jharkhand appears to be not sustainable because from the details of the consignment sent to Jamshedpur branch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been bodily lifted and quoted in the Assessment Order for the year 2007-08. The Assessing Authority has given reasons for not accepting the contentions of the appellant. Following is relevant extract from the Assessment Order: a) For the month of March 2008 it is found that the vehicle number mentioned on the consignment notes raised by the dealer and corresponding sale bills of the branch are same. It is found that the goods sent from Khopoli plant of the dealer are directly delivered to the customers of the branch in the month of March 2008. So the claim of Branch Transfer to Jamshedpur Branch for the month of March 2008 is not allowable. b) It is found after sample verification that your branch has received Purchase Order (P.O.) from M/s Tata Steel Ltd. In the purchase order the customer has given details of delivery date, quantity and specifications of goods (Steel rods), delivery point etc. c) The P.O. has been addressed in your name c/o the branch office. d) The customer has instructed to supply steel to Ring Plant at Jamshedpur through the branch. e) On the sale bills raised by the branch, on M/s Tata Steel Ltd. (the customer), the purchase orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el purchase order. All the conditions mentioned in Tata Steel purchase order have been used to negative the branch transfer claim of the appellant in respect of transactions with M/s Omni Auto Ltd. Admittedly for these transactions there is no purchase order on record. If the appellant has not produced any purchase orders, as directed, the Assessing Authority should have discussed the appellant s transactions with M/s Omni Auto Ltd. more in detail. It should not have made general statements. Without even referring to M/s Omni Auto Ltd., the Assessing Authority has stated that it has considered the dispatch proof, consignment notes, F forms etc. produced by the appellant and after verification it has come to the conclusion that in spite of production of F forms, the claim of branch transfer is not allowable. Whether all this material was with respect to transactions with M/s Omni Auto Ltd. is not clear, because there is no reference to M/s Omni Auto Ltd.. It was necessary for the Assessing Authority to first lay a firm foundation by specifically referring to individual transactions with M/s Omni Auto Ltd. since the purchase orders were not before it. As already noted in Tata Engine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 is set aside and to that extent the matter is remanded to the Assessing Authority to pass a fresh assessment order in respect thereof after examining transactions covered by the said amount, independently and in accordance with law and after giving the appellant opportunity of hearing. b) So far as Assessment Order dated 31.05.2010 for the year 200708 is concerned, it is set aside. The matter is remanded to the Assessing Authority with a direction to pass a fresh assessment order independently and in accordance with law after giving the appellant opportunity of hearing. It is made clear that I have not expressed any opinion on the merits of the case. Nothing said in this order should be treated as expression of opinion on the merits of the case. The Assessing Authority shall deal with all contentions independently and in accordance with law. The appellant shall cooperate with the Assessing Authority and produce the available documents. The appellant shall not seek unnecessary adjournments. The entire exercise be conducted as expeditiously as possible and preferably within a period of six months from the date of receipt of this order. - - TaxTMI - TMITax - CST, VAT & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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