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TMI Blog2024 (4) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... tore, Bangalore, Chennai, Cochin, Hyderabad and Visakhapatnam. 3. The assessing officer initiated assessment proceedings against the respondent by issuing a notice in Form VII B for the period from 01.04.2005 to 31.03.2006 under the Central Sales Tax Act, 1956 [the CST Act] in respect of the goods that had moved from the manufacturing unit at Navi Mumbai to the branches in other States and an assessment order was passed on 29.02.2012 raising a demand of Rs. 94,25,134/- for the reason that the claim of the respondent that it was a case of branch transfer was not correct. In arriving at a conclusion that the movement of the goods from the factory of the respondent at Navi Mumbai to the branches at Ahmedabad, Delhi, Coimbatore, Bangalore, Chennai, Cochin, Hyderabad and Visakhapatnam was as a result of pre existing orders placed by the customers at the branch offices, the Deputy Commissioner relied upon a decision of the Customs, Excise and Service Tax Appellate Tribunal, Mumbai [CESTAT] dated 05.08.2005 in the case of the respondent itself in Beardsell Ltd. vs. Commissioner of Central Excise, Belapur [2006(193) E.L.T. 325 (TRI.-MUMBAI)]. The relevant portion of the order dated 29.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fices. The site engineers visit the site and understand the specifications and requirements of the customers. The customer places an order on the dealer specifying the dimensions of the building required by them. Thereafter, the engineers of the dealer prepare detailed specifications for the whole building in terms of length, width and height of the structure (such as the walls, roofs, floors, windows, doors) and number of panels required etc. The engineers thereafter place dispatch instructions to the factory. It is therefore crystal clear from the dealer's own submission before the Hon'ble Tribunal that the branch transfers are affected as a result of preexisting orders placed by the customers with the branch offices. What has been submitted as well as admitted by the dealer before the Hon'ble Tribunal need not be proved by the department and therefore the burden of proof in this regard does not lie on the department. During verification of the branch transfer invoices and transport receipts produced by the dealer in support of the branch transfer claim it is observed that certain goods which are shown to have been transferred to the branches have in fact been directly dispatched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 8,05,65,192/-, for which tax was collected and paid. It was pointed out that branch transfers to offices outside the State of Maharashtra was shown at Rs. 2,09,60,154/-. Therefore, the dispute is only with regard to this amount of Rs. 2,09,60,154/-. Appellant has contended that each and every transactions are required to be looked into as per the Supreme Court judgment in the case of Tata Engineering and Locomotive Ltd. vs. Assistant Commissioner of Commercial Tax reported in (1970) 26 STC 354. ***** Hence, he contended that assessing authority has to examine each and every transaction. However, assessing authority looked into three transactions worth Rs. 53,21,459/- and applied the ratio to all the other transfers. It was, therefore, contended that the burden of proof was on the State and therefore each transaction was required to be looked into. There is substance in the argument. 14. As appellant has filed 'F' Form, there is presumption raised. Therefore, the State has to prove that it is not a branch transfer. Just on the basis of Judgment of Central Excise, Custom and Services Tribunal and on the basis of these three transactions, so far as Central Excise, Customs an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Madras High Court in Yousuff Radio vs. The Board of Revenue, Commercial Taxes, Chepauk, Madras-5 [(1979) 43 STC 525]. To support the contention that the movement of the goods from the State of Maharashtra to other State was occasioned because of pre-existing orders, learned counsel placed reliance upon the decisions of the Supreme Court in Ashok Leyland Ltd. vs. State of T.N. and another [(2004) 3 SCC] and Hyderabad Engineering Industries vs. State of Andhra Pradesh [(2011) 4 SCC 705]. 8. Shri N.V. Tapare, learned counsel for the respondent, assisted by Sandeep D. Ghaterao, however, supported the impugned order and submitted that it does not call for any interference. Learned counsel submitted that the Deputy Commissioner was not justified in placing reliance upon the decision dated 05.08.2005 of CESTAT to reject the claim of branch transfer of Rs. 2,09,60,154/- and on the other hand MSTT has given good and cogent reasons for accepting the claim of the respondent regarding branch transfer of Rs. 1,56,38,695/-. 9. The submissions advanced by the learned counsel appearing for the appellant and the learned counsel for the respondent have been considered. 10. The iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of despatch of such goods and if the dealer fails to furnish such declaration, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of sale. (2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under sub-section(1) are true, he may, at the time of, or at any time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale. *****" (emphasis supplied) 12. The provisions of sections 3 and 6A of the CST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce to make it liable to tax under Section 6, the declaration in Form 'F' under section 6A would be of no avail. 23. It is an accepted position in law that a mere transfer of goods from a head office to a branch office or an inter-branch transfer of goods, which are broadly brought under the phrase 'Branch transfers' cannot be regarded as sales in the course of inter-State trade, for the simple reason that a head office or branch cannot be treated as having traded with itself or sold articles to itself by means of these stock transfers. 24. In the instant case, the case of the Revenue is not only based on the agreement of sale but also on the presumption under Section 3(a) of the Central Act. 25. In the instant case, the assessing authority and the Tribunal have recorded a finding of fact that there were prior contracts between Usha Sales Ltd. and the assessee and in pursuance of those contracts, the goods moved from the assessee's factory at Hyderabad to its Branch offices to be delivered to Usha Sales Ltd. or their nominees. In order to appreciate the contention canvassed, it is necessary to set out certain clauses from the sales agreement. ***** 30. From the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A contract of sale of goods would be effective when a seller agrees to transfer the property in goods to the buyer for a price and that such a contract may be either absolute or conditional. If the transfer is in presenti, it is called a 'sale'; but if the transfer is to take place at a future time and subject to some conditions to be fulfilled subsequently, the contract is called 'an agreement to sell'. When the time in the agreement to sell lapses or the conditions therein subject to which the property in goods is to be transferred are fulfilled, the 'agreement to sell' becomes a 'sale'. When the 'sale' or 'agreement to sell' 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 whether the order is placed with any branch office or any head office which resulted in the movement of goods, 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 would result in exigibility of tax under section 3(a). 14. The provisions of sections 6 and 6A had earlier also come up for interpretation be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason of legal fiction, such movement of goods would be deemed for all purposes of the said Act to have occasioned as a result of sale. Such declaration indisputably is to be filed in Form F. ***** 45. When the dealer furnishes the original of Form F to its assessing authority, an enquiry is required to be held. Such enquiry is held by the assessing authority himself. He may pass an order on such declaration before the assessment or along with the assessment. Once an order in terms of Sub-Section 2 of Section 6-A of Central Act is passed, the transactions involved therein would go out of the purview of the Central Act. In other words, in relation to such transactions, a finding is arrived at that they are not subjected to the provisions of the Central Sales Tax. It is not in dispute thereunder no appeal is provided there against. ***** 47. By reason of Sub-Section (2) of Section 6-A, a legal fiction has been created for the purpose of the said Act to the effect that transaction has occasioned otherwise than as a result of sale. 48. On an analysis of the aforementioned provisions, therefore, the following propositions of law emerge: (i) The initial burden of proof is on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent at Navi Mumbai to its branches in other States was as a result of pre-existing orders placed by the customers at the branch offices of the respondent or was merely a branch transfer as claimed by the respondent. The assessing officer, in the order dated 29.02.2012, relied upon the decision dated 05.08.2005 rendered by CESTAT in the case of the respondent wherein a finding was recorded that the movement of goods from the factory at Navi Mumbai to the branches of the respondent in other States was as a result of pre-existing orders placed by the customers at the branch offices. The assessing officer held that it was not open to the respondent to take one plea before CESTAT and a contrary plea before the authority. The assessing officer, therefore, concluded that the branch transfer had not taken place and it was an inter-State sale. 17. The respondent filed an appeal before MSTT. In its order dated 26.04.2016, MSTT held that since the respondent had filed form 'F', there would be a presumption that it was not an inter-State sale and it was for the State to prove that it was not a branch transfer. The decision of CESTAT was held not to be applicable as it was regarding class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the panels) supplied along with the panels; and (iv) Not altered to any other size at the site. 2.3 (a) Details of correct dimensions of panels, roofing, flashing etc. required for assembly of buildings at site by the appellants engineers at site determined. Panels are made of the predetermined thickness and length and in numbers in the machine itself. The required roof panels are also made ready in the machine. The doors and windows, wherever required are made ready in the factory workshop. Thereafter panels for roof, walls, doors, and windows along with required flashing i.e. ancillaries such as channels, corner angles are dispatched in the vehicle for assembly at the site. As the panels are in completely knocked down condition, assembly of the panels at the site is very easy. Panels for floor (wherever required) wall, roof, windows, doors and ancillaries such as channels and corner angles are fixed at the site. (b) The prefab buildings made by the appellants are, inter alia, as under : (i) Telephone booths (ii) Mobile phone transmitter cabins (iii) Portable cabins (iv) Work site accommodation (v) Factory building (vi) Cold storage building. 2.4 Purchase or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovement 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 whether the order is placed with any branch office or head office which resulted in movement of goods, it would be a case of inter-State sale resulting in exigibility of tax under section 3A of the CST Act. 21. In Ashok Leyland, the Supreme Court held that where the purchaser places an order for manufacture of goods as per his specification, a presumption can be raised that agreement to sell had been entered into. 22. In this connection, it would also be pertinent to refer the decision of the Supreme Court in English Electric Company of India Ltd. Vs. The Deputy Commercial Tax Officer and others [(1976) 4 Supreme Court Cases 460] wherein it was held: "16. When a branch of a company forward a buyer's, order to the principal factory of the company and instructs them to despatch the goods direct to the buyer and the goods are sent to the buyer under those instructions it would not be a sale between factory and its branch.' If there is a conceivable link between the movement of the goods and the buyer's contract, and if in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fications, they were despatched to the head office at Delhi for being forwarded to the respective customers at whose instance and pursuant to the contracts with whom the goods were manufactured. The goods could as well have been despatched to the respective customers directly from the factory but they were sent in the first instance to Delhi as a matter of convenience, since there are better godown and rail facilities at Delhi as compared with Faridabad. The despatch of the goods of Delhi was but a convenient mode of securing the performance of contracts made at Delhi. Goods conforming to agreed specifications having been manufactured at Faridabad, the contracts of sale could be performed by respondent 1 only by the movement of the goods from Faridabad with the intention of delivering them to the purchasers. Thus, the movement of goods was occasioned from Faridabad to Delhi as a result or incident of the contracts of sale made in Delhi." (emphasis supplied) 24. It clearly transpires from the admission of the respondent before CESTAT that the movement of the goods had occasioned from the manufacturing unit at Navi Mumbai in the State of Maharashtra to the branches of the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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