TMI Blog2022 (11) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... ny obligation to place purchase orders. In case the paint had remained unsold, the option for the assessee is to either destroy it or to take it back to its Manufacturing unit. It is not in dispute that goods were transferred from Mangaluru to various depots situated in different States under Form-F and assessments for the years 2006-07 and 2007-08 were concluded by accepting the Statutory declarations filed in Form-F. The Open Purchase Orders do not constitute any Contract. The Purchase Orders issued from time to time for supply of goods constituted Contract between parties. Thus, the sale effected pursuant to such Purchase Orders is an Intra-State sale in that State. It is so because, whilst Goods were stored in various States, the ownership and title of goods vested with the assessee. Pursuant to the Purchase Orders received from time to time, assessee has delivered the goods from its depot in that State to the respective purchasers. Order dated 27th June 2019 Annexure-A is quashed holding that Open Purchase Orders are only standing offers and do not constitute a confirmed 'Agreement to sell' and movement of goods are mere stock transfers - petition allowed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 16.03.2012 for the year 2006-07 and order dated 14.03.2012 for the year 2007-08 under Section 9(2) of CST Act (Central Sales Tax Act, 1956) read with Section 39(2) of the K-VAT Act by accepting the statutory declarations made in Form-F in support of exemption for stock transfers. 7. The Enforcement Officers of Commercial Tax Department inspected petitioner's premises at Mangaluru and the branches situated outside Karnataka. On verification of the documents, the Department came to the conclusion that petitioner was manufacturing automotive paints against specific orders given by the customers and therefore, the Company could identify the customer for whom the paint was required. Accordingly, the Enforcement Authorities recommended reassessment under Section 9(2) of the CST Act read with Section 39 of the K-VAT Act for the tax period April 2006 - January 2011, for the purpose of levy of tax under Section 3(a) of the CST Act. 8. Based on the Investigation Report, the Department issued proposition notices for reopening the assessment proceedings and concluded the proceedings by rejecting 'F- forms' on the Stock Transfer turnover on the ground that Inter-st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IDL Chemicals Limited Vs. State Of Orissa (2007)14 SCC 386 (para 10); Hyderabad Engineering Industries Vs. State Of Andhra Pradesh (2011) 4 SCC 705 (paras 46, 47, 50 52); English Electric Company of India Ltd. Vs. The Deputy Commercial Tax Officer And Others (1976)4 SCC 460 (para 15); 15. We have carefully considered rival contentions and perused the records. 16. Undisputed facts of the case are, petitioner, a registered dealer under the K-VAT Act is having a paint manufacturing unit in Mangaluru and depots in states of Maharashtra, Haryana, Tamil Nadu and Uttarkhand. It supplies paint to original equipment manufacturers and the ancillary units. It s case is, it transfers goods to it's depots situated in the town/city where the purchasers' manufacturing unit is situated. It supplies the product based on the purchase order received from the purchaser from time to time. 17. The argument of Shri Sridharan in substance, is open purchase orders do not stipulate any specified quantity. Therefore, it cannot be construed as an 'agreement to sell'. In order to satisfy the requirement under Section 3(a) of the CST Act, there must be inter-stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom petitioner's depots immediately on just in time model. 22. Shri Sridharan placed reliance on the purchase orders given by following companies: Mercedes Benz India Pvt.Ltd., Pune Mahindra Renault, Pimpri, Pune, Mahindra Vehicle Manufacturers Ltd., Pune, Motherson Automotive Technologies Engineering, Kanchipuram District, Tamil Nadu. 23. In the purchase order issued by Mercedes Benz dated 10.05.2012, it is stated as follows: c) the supplier shall guarantee supply of goods in the scope referred to below. The supplier shall not be entitled to demand MB India purchases of specific quantities of parts. Quantities notified by MB India are merely non-binding planned quantities. The binding quantities to be supplied by the supplier and the delivery dates are specified in the individual call-off orders of MB India. (Emphasis Supplied) 24. In page Nos.671 to 673 of the paper book, the details of rate per unit valid between 01.05.2012 to 31.12.2012 in respect of seventeen different kinds of goods have been mentioned. 25. In the purchase order dated 01.09.2006 issued by Mahindra Renault, the 'unit price' of the products has been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale, is a contract plus a conveyance. Thus, by an agreement to sell a mere jus in personam is created, by a sale a jus in rem is transferred. Where goods have been sold, and the buyer makes default in payment, the seller may sue for the contract price, but where an agreement to buy is broken, usually the seller's only remedy is an action for unliquidated damages. Similarly, if an agreement to sell be broken by the seller, the buyer has only a personal remedy against the seller. The goods are the property of the seller and he can dispose of them. They may be taken in execution for his debts, and if he becomes bankrupt they pass to his trustee in bankruptcy. But if there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against the seller, but also the usual proprietary remedies in respect of the goods themselves, such as the actions for conversion and detinue. Again, if there be an agreement for sale and the goods perish, the loss as a rule falls on the seller, while if there has been a sale the loss as a rule falls upon the buyer. 31. In Maddala Thathiah, Railways had invited tenders for supply of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on agreements, orders were placed by distributors with Kelvinator after the Refrigerators had reached Kelvinator's Sales Office and Godown in New Delhi. The Assessment Authority held that the transaction between the parties were Inter-State sales. The Hon'ble Supreme Court of India has held as follows: 21. We accordingly accept the appeal and set aside the judgment of the High Court. The answer given by the High Court to the question referred to it is discharged. In our opinion, the three agreements between the appellant and the distribution were merely agreements for the distribution of goods and were not agreements of sale between the parties. It cannot, in our opinion, be said that there was any movement of refrigerators from Faridabad to Delhi under a contract of sale. The question in the circumstances is answered against the department. The transactions between the appellant and the distribution did not, in our opinion, constitute sale in the course of inter-state trade or commerce. As such, there was no liability to pay tax under the Act. The appellant shall be entitled to the costs from the respondent of this Court as well as in the High Court. 34. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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