TMI Blog2007 (9) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and inter alia held that there was no question of any notional or constructive delivery to the appellant in that case under Section 6(2) of the CST Act and the Tax Board referring to the said judgment allowed the appeal of the assessee and therefore, the Revenue has filed these revision petitions before this court. 2. Mr. R.B. Mathur, learned counsel for the Revenue has urged that in view of the circulars issued by the Commissioner, namely, Kar Niti Paripatra-1997 dated 16.09.1997, the assessing authority was justified in drawing the inference of constructive delivery of the goods to the dealer and therefore, the inter-State sales made by the dealer by transfer of documents of title to the goods could not be held to be exempt from tax under Section 6(2) of the Act, notwithstanding the fact that the dealer had submitted the declaration Forms 'C' from the purchasing dealers, supported by Form E-1 also. He relied upon the decision of Delhi High Court in the case of Arjan Dass Gupta Bros. v. Commissioner of Sales Tax, New Delhi reported in (1980) 45 STC 52 (Del.). 3. As against this, Mr. Vivek Singhal, learned counsel for the respondent-assessee relied upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fecting the sale furnishes to the prescribed authority in the prescribed manner and within the prescribed time or within such further time as that authority may for sufficient cause, permit,- (a) a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars in a prescribed form obtained form the prescribed authority; and (b) if the subsequent sale is made- (i) to a registered dealer, a declaration referred to in clause (a) of subsection (4) of section 8, or (ii) to the Government, not being a registered dealer, a certificate referred to in clause (b) of sub-section (4) of section 8: Provided further that it shall not be necessary to furnish the declaration or the certificate referred to in clause (b) of the preceding proviso in respect of a subsequent sale of goods if,- (a) the sale or purchase of such goods is, under the sales tax law of the appropriate State, exempt from tax generally or is subject to tax generally at a rate which is lower than [four percent], (whether called a tax or fee or by any other name); and (b) the dealer effecting such subsequent sale proves to the satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above sub-section (2) of section 6 will not be available in such cases. It is found that trade is often claiming large exemptions under this provision, particularly in respect of paper, dyes and chemicals, etc. It is, therefore, directed that all the assessing authorities should specifically examine the nature of transactions before granting benefit under the said section. It may be argued that in view of the Explanation 1 to section 3 of the CST Act, 1956, inter-State movement of goods continues until the consignee obtains physical delivery of goods from the carrier, after arrival of these goods at the destination. This argument is based on the incorrect notion that delivery in the Explanation means only physical delivery . This argument can be countered on the basis of the well settled proposition of constructive delivery. The material facts to be looked into by the assessing authorities while granting benefit of section 6(2) of the CST act, relate to the termination of the movement of goods in the inter-State transactions. If after arrival of the goods at the destination, the consignee asks the transporter expressly or impliedly, to retain the goods at his godown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding exemption of sales under S. 6(2). CST Act. The Delhi High Court had held that Explanation 1 to S. 3(b) of the CST Act, 1956 did not permit the dealer to 'expand the movement of goods beyond the time of physical landing of the goods in the Union Territory of Delhi. As to the knowledge except this there are no other directly relevant or contra judgment reported from any other High Court. It is understood that Special Leave Petition is pending in the Supreme Court on this issue but there is no stay. As such Delhi High Court judgment holds the field. It is therefore, enjoined upon the assessing authorities that in future they should not grant the benefit of exemption under S. 6(2), CST Act, simply on furnishing of the Form E-I/E-II and C Form. If on the contrary, it is found that assessee had taken physical delivery or the goods remained with the transporter beyond a reasonable time looking to the facts and circumstances of each case, the doctrine of constructive delivery should be invoked and action be taken accordingly. 7. Thereafter, by a subsequent circular dated 15.04.1998 (S. No. 1132A), the learned Commissioner of the Department issued the following circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legal position. 8. Turning to the decision of the Division Bench of this court wherein the learned Division Bench agreeing with the view of the Allahabad High Court in Karam Chand Thappar and Brother (C.S.) Ltd. v. Commissioner, Sales Tax reported in (1981) TLR 3101 (All.), here the Hon'ble Allahabad High Court took a different view than the one expressed by the Delhi High Court in Arjan Dass Gupta's case (supra), in the case of Guljag Industries Ltd. (supra) in para 27 to 31 held as under:-- 27. The department has heavily relied upon a decision of the Delhi High Court in Arjan Das Gupta Bros. v. Commissioner of Sales Tax reported in [1980] 45 STC 52. The assessee, M/s. Arjan Dass Gupta was engaged in the business of selling coal, imported from Bihar/Bengal to retailers in The Union Territory of Delhi. During the assessment year 1964-65, procurement of coal from the collieries outside Delhi and its sale in Delhi was regulated by the Delhi Coal Control Order, 1963, issued under section 3 of the Essential Commodities Act. The assessee used to place orders on colliery owners in Bengal/Bihar for the purchase of coal. The railway receipts for the consignments of coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to the carrier or bailee for transmission and the point of termination is when the goods are taken delivery of from the carrier or such bailee. The division Bench held that the Explanation contains a deeming clause and the fiction so created is to be taken to its logical conclusion. The court further held that if sale or purchase is effected by transfer of documents of title to the goods during such movement of the goods, it shall be treated as an inter-State sale. We are in respectful agreement with the view expressed by the division Bench of the Allahabad High Court. 29. The assertion of the department to the effect that there was constructive delivery of the goods at the branch office of the appellant is on the basis of stock entries in the daily sales register and preparation of invoices/delivery of challans favouring the subsequent buyers. In this regard. Explanation I provides the clue. It defines commencement of the movement of goods and their termination and, as such, it overrides and other concept regarding commencement and termination of movement of goods for the purpose of section 3(b). We do not find anything in the language of the Explanation I, which may indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansporter by the appellant Guljag Industries for destination to Bhiwadi to be delivered to SRF Limited on the instructions and on account of the appellant; (ii) In respect of all transactions in question, the appellant did not take physical/actual delivery of goods from the transporter at any time during the course of inter-State movement; (iii) The transporter had given delivery to the ultimate buyer in whose favour, goods receipts/bilties were endorsed by the appellants; (iv) The said goods merely passed through the areas where the appellant's branches/head office are located and they were carried to the destination of the subsequent buyers in that very vehicle in which they were brought from Gujarat by the same transporter. Thus factually, the movement of goods continued and the transporter also contained to carry goods as transporter. 30. Consequently, the inference of constructive delivery raised in the instant case by the assessing authority, which is the sole basis for refusing the exemption, is patently illegal. 31. It is also submitted by the learned counsel for the appellant that under section 51(2) of the Sale of Goods Act, goods are deemed to be in tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... governed by the CST Act and, therefore, beyond the scope of the RST Act. The proceedings initiated by the authorities under the RST Act are wholly without jurisdiction and without authority of law. 9. Thus, the Division Bench of this court distinguished the decision of Delhi High Court in Arjan Dass Gupta's case (supra) vide para 27, which is the very basis and foundation of the circular issued by the learned Commissioner and which has formed the foundation of the impugned assessment order imposing the tax on the assessee denying the exemption of subsequent sales made under Section 6(2) of the CST Act complying with the conditions stipulated therein, namely furnishing of declaration Forms 'C' and Form E-1 prescribed under Rule 12(4). As a matter of fact, the circulars issued by the learned Commissioner, which are directly in conflict with the Division Bench judgment of this court, deserved to be quashed by this court, but since they appear to have not been cited or brought to the notice of the Division Bench in Guljag Industries Ltd.'s case (supra), they were not dealt with by the Division Bench in that matter. 10. This court is of the opinion that the concep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent Circular dated 15.04.1998 purportedly issued to ameliorate the situation for dealers created by previous circular dated 16.09.1997, merely ended up extending the time limit of 10 days to 30 days without undoing the damage done by the previous circular by propounding a particular view of constructive delivery. In fact, the very power to issue such circulars by the learned Commissioner giving a particular interpretation of law purportedly binding on all the assessing authorities is doubtful. There is no specific provision in the Sales Tax Act. either under the RST Act or under the CST Act, empowering the Commissioner to issue such circulars, as against such powers conferred under Section 119 of the Income Tax Act on the Central Board of Direct Taxes. Even Section 119 of the Income Tax Act, which empowers the highest administrative body under the Act, namely CBDT, by way of its proviso restricts and provides that no such order, instruction or direction shall be issued so as to require any income Tax authority to make a particular assessment or dispose of a particular case in a particular manner and such orders or instructions shall also not interfere with the discretion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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