TMI Blog2023 (3) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... ndependent registrations or the fact that different lines of business would not convert an inter unit transfer as constituting a ''sale''. Unless and until it is shown that there are two distinct legal entities involved in a transaction, levy of tax by treating it as a transaction of sale is wholly impermissible. It would be relevant to refer to the following judgment of the Andhra Pradesh High Court in KCP. LIMITED VERSUS STATE OF ANDHRA PRADESH [ 1992 (9) TMI 330 - ANDHRA PRADESH HIGH COURT] wherein it was held that mere registration certificate obtained by different branch or unit will not by itself result in different units becoming distinct and different legal entities capable of transferring properties/goods fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner had two Divisions in the State of Tamil Nadu, namely, Rajashree cement, a Cement unit and Hi Tech Carbon Unit producing carbon black. It is submitted that both the Divisions had obtained separate registration certificates under the Tamil Nadu General Sales Tax Act, 1959. Apart from the above two divisions, the company had seven other divisions across the country, in all, nine divisions across the country viz., (1) Rayon Division (2) Cement Division (3) Birla White Cement Division (4) Jayashree Textiles (5) Rajashree Syntex (6) Jayashree Insulators (7) Hi-Tech Carbon (8) Birla Periclase (9) Global Exports and Marketing. (b) During the assessment year 1998-99, the Cement Division of Indian Rayon and Industries Limited had s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property in goods (other than by way of mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration and includes (i) a transfer, otherwise than in pursuance of a contract, of property in any goods of cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) a delivery of goods on hire-purchase or any system of payment by installments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard:- (a) Hi Tech Carbon Unit as well as Cement Unit are different units of the petitioner company, namely, Indian Rayon and Industries Limited, which alone has been registered under the Companies Act, 1956. (b) The deferral agreement entered into between Hi Tech Carbon Unit III and the Government of Tamil Nadu wherein a reference is made to Hi Tech Carbon as being a unit of Indian Rayon and Industries Limited ; (c) The assessment order of cement unit is made in the name of Indian Rayon and Industries Limited. The assessment order of Hi Tech Carbon is again made in the name of Indian Rayon and Industries Limited; (d) The proceedings of Regional Provident Fund Commissioner wherein it has been stated that Hi Tech Carbon unit sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent branch or unit will not by itself result in different units becoming distinct and different legal entities capable of transferring properties/goods from one entity / person to another which is a sine qua non for a transaction to be treated as a sale attracting the charging provision. The relevant portion of the said judgment is extracted hereunder: 19. The registration certificate obtained by each branch or unit may, at best show, that they are separate assessable entities. But it has no bearing on the question whether they are distinct and different legal entities capable of transferring property in goods frcom each other. It is to be noted in this context that the language used in the provision defining sale , either under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods to its branch office outside the State and arranges to deliver them to the buyer. The registered office and the branch office do not possess separate jurisdical personalities . 6. It is thus evident that unless and until there are two distinct entities, the question of sale may not arise. However, the Tribunal has not even addressed this issue and has misdirected itself in looking at the factum of independent registrations and independent lines of business to conclude that the alleged inter unit transfer would constitute sale. 7. In the circumstances, we deem it appropriate to remand the matter back to the Tribunal for examining the question on the strength of the documents whether both Hi-Tech Carbon Unit and Cement Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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