TMI Blog2024 (4) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... omers. Where once movement of goods from one state to another state takes place on account of sale or purchase, the transaction assumes the character of inter-state sales in terms of Section 3(a) of CST Act, 1956. The judgment in SAHNEY STEEL AND PRESS WORKS LTD. AND ANOTHER VERSUS COMMERCIAL TAX OFFICER AND OTHERS [ 1985 (9) TMI 313 - SUPREME COURT] squarely apply to the case on hand. In the instant case also the movement of goods shall be regarded as inter-state sales rather than mere stock transfer - the argument of the petitioner in this regard, cannot be countenanced. The other contention of the petitioner is concerned, as rightly submitted by learned Government Pleader, the 2nd respondent has exercised his power under Section 9(2) of CST Act, r/w Section 20 (2) of APGST Act but not under Section 6A(3) of CST Act. There are no merits in the petitioner s case and accordingly the Writ Petition is dismissed. - HONOURABLE SRI JUSTICE U. DURGA PRASAD RAO AND HONOURABLE SRI JUSTICE A V RAVINDRA BABU For the Petitioner : C.V. Narasimham For the Respondent : Gp For Commercial Tax, Suribabu S(Spl SC For CT AP) ORDER (PER HON BLE SRI JUSTICE U. DURGA PRASAD RAO) The petitioner seeks w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed rubber products and adhesives (standard goods) to its branches outside the State was worth Rs. 1,38,25,291/- for execution of lagging contracts (works contract). Therefore, the petitioner claimed exemption under Section 6A of CST Act on such stock transfers to its branches by filing Form F in support thereof. (x) The petitioner during AY 2000-2001 also affected inter-state sales of specific rubber products and adhesives to an extent of Rs. 91,77,829/- to buyers outside the State, in respect of which buyers outside the state placed purchase orders. Those stocks were dispatched directly to the customers outside the State of A.P. and such sales were treated by the petitioner as inter-state sales and tax was paid under CST Act. (c) The petitioner submitted monthly returns for the year 2000-01 claiming exemption under Section 6-A for the stock transfer to the branches and the 2nd respondent vide order in GI No. 5848/2000-01/CST, dated 28.02.2002 accepted the same in terms of Section 6A and passed the Assessment Order. However, the 1st respondent issued a show cause noticed dt. 29.08.2005 and proposed to revise the assessment particularly rejecting the claim of stock transfer U/s 6A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired dimensions and dispatches the same directly to the branches by raising invoice for the material supplied by indicating the purchase order number and the date. Therefore, the goods manufactured and sold by the petitioner are not standard goods but are tailor made goods against the orders of the customers outside the State and placed on their branches as communicated by the HO by way of work order. Therefore, the movement of goods from Guduru to outside the State is nothing but a contract of sale between petitioner s branches and customer outside the State. The petitioner s HO and branches constitute one single legal entity and therefore orders placed on the branches by the customers outside the State amounts to placing the order on the petitioner who in turn manufactures the goods and sold the same in the course of interstate trade U/s 3(a) of CST Act. Therefore, the revision order is perfectly valid and within the jurisdiction of the 2nd respondent. (e) The respondent put up its objections to the para wise pleadings of the petitioner s affidavit and contended that the petition is not maintainable and prayed to dismiss the writ petition. 4. The petitioner filed reply affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate, inter-state sale as contemplated under Section 3(a) of CST Act, 1956 shall be deemed to have occasioned and the transactions are liable to be taxed under CST Act, 1956. To buttress his point that the if the movement of goods from one state to another has occasioned on account of sale or purchase, the transaction shall be recorded as interstate trade or commerce, he placed reliance on Sahney Steel and Press Works Limited and another v. Commercial Tax Officer and others (1985) 4 SCC 173 and Assam Company (India) Ltd. v. Commissioner of Taxes, Assam, Guwahati and Others 1997 SCC OnLine Gau 207=(1997) 107 STC 154. 8. So far as the contention of the petitioner that Section 6A(3) was introduced prospectively in the year 2010 is concerned, learned Government Pleader argued that the 2nd respondent has exercised his power of re-assessment/revision under section 9(2) of the CST Act and therefore the said argument is not sustainable. He thus prayed to dismiss the Writ Petition. 9. The point for consideration is: Whether the movement of goods in the instant case is only a stock transfer to the branches and liable to be exempted under Section 6A of the CST Act 1956 or the transaction is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... casioned. The situs of sale occurred in Andhra Pradesh and hence the state of A.P. is the appropriate state to tax the interstate sales under Section 3(a) of CST Act, 1956. The 2nd respondent specifically held that the goods manufactured by the assessee are not standard in nature but there are only three types of rubber sheets being manufactured which are not available in market like a table fan or iron box which can be considered to be standard goods. It was also observed that goods were never sent as a routine practice for the branches to make sales. Therefore, the branches which are located outside the state acted only as conduits between the customer industries and the assessee. Their role was to procure orders for the company. It was also held that the documents produced by the assessee show that no sales were made from the branch office because the invoicing was done by the Gudur office. The 2nd respondent turn down the argument of the petitioner that the property vest with the petitioner till the goods are fixed as per rate contract it was held that the goods were appropriated to the contract of sale the movement they were produced as per the specifications of the customer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This aspect has been vividly explicated by Hon ble Apex Court in Sahney Steels case (supra 1) as follows: 8. The petitioners challenge the finding of the Commercial fax Officer that the transactions in question constitute inter-State sales. The petitioner contend that when the registered office of the company at Hyderabad dispatched the manufactured goods to its branch office it was merely a transfer of stock from the registered office to the branch office, and thereafter the movement of the goods started from the branch office to the buyer. It is urged that the registered office and the branch office were separately registered as dealers under the Sales Tax law and transactions effected by the branch office could not be identified with transactions effected by the registered office. The movement of the goods from Hyderabad to the branch office, it is said, was only for the purpose of enabling the sale by the branch office and was not in the course of fulfilment of the contract of sale. We are unable to agree. Even if, as in the present case, the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an Incident of the contract entered into with the buyer, for it was intended that the same goods should be delivered by the branch office to the buyer. There was no break in the movement of the goods. The branch office merely acted as a conduit through which the goods passed on their way to the buyer. It would have been a different matter if the particular goods had been dispatched by the registered office at Hyderabad to the branch office outside the State for sale in the open market and without reference to any order placed by the buyer. In such a case if the goods are purchased from the branch office, it is not a sale under which the goods commenced their movement from Hyderabad. It is a sale where the goods moved merely from the branch office to the buyer. The movement of the goods from the registered office at Hyderabad to the branch office outside the State cannot be regarded as an incident of the sale made to the buyer. 13. Similar view was expressed by the High Court of Gauhati in Assam Company case (Supra 2). 14. The above judgments squarely apply t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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