2014 (5) TMI 761 - HC - VAT and Sales Tax

Court confirms Tribunal's decision on inter-state sales of raw rubber under Central Sales Tax Act

The Court dismissed the Revenue's Tax Case (Revision), confirming the Tribunal's decision that the transactions involving the purchase and transportation ... Exemption of Tax - Inter-state sale – Whether delivery of raw rubber taken from State Trading Corporation, Chennai to the factories outside the State is inter-state sale – Held that:- Assessee's factories are located outside the State one at Andhra Pradesh and other at Pondicherry - The assessee gave the declaration that the rubber to be allotted was meant for use in the factory premises at the mentioned place for manufacturing and processing of end product mentioned Sl.No.4, the assessee also gave an undertaking that they shall not use the goods anywhere else nor would be sold any portion of allotment - In the allocation order, the names of the assessee's factories situated in Andhra Pradesh and Pondicherry were mentioned - The proforma invoice and delivery order were in the name of respective factories - In the background of these facts, it is held that the assessee is entitled to succeed. Relying upon SAHNEY STEEL v. PRESS WORKS LTD v. COMML. TAX OFFICER [1985 (9) TMI 313 - SUPREME COURT OF INDIA] - Even if the customer placed an order with the branch office when the branch office had communicated the terms and specifications of the order to registered office and the branch office itself was concerned with dispatching, billing and receiving of the sale price, the order placed by the customer was an order placed with the head office of the company, and for the purpose of fulfilling that order, the manufactured goods commenced their journey from the registered office in the State of Andhra Pradesh to the branch outside the State for delivery of the goods to the customer therein - When the assessee had placed orders on behalf of its branches/ factories, situated outside the State, there could be no doubt as regards the character of the sale as nothing but an interstate sale - Similarly regarding the purchase of tyres from State Trading Corporation on allotment of rubber, yet, the decision rested on the facts found - Therefore, the decision is distinguishable on facts – Relying upon CCE v. ALNOORI TOBACCO PRODUCTS [2004 (7) TMI 91 - SUPREME COURT OF INDIA] - Observations in judgments must be read in the context of the facts of the case – Accordingly, Revision dismissed, thereby confirming the order of the Tribunal – Decided against Revenue. Issues Involved:1. Whether the Sales Tax Appellate Tribunal erred in finding that the petitioner had effected purchases of raw rubber from M/s. State Trading Corporation of India Limited, inside the State of Tamil Nadu.2. Whether the sales effected by State Trading Corporation of raw rubber to the petitioners were inter-state sales taxable only in the hands of State Trading Corporation.3. Whether the Tribunal was correct in affirming that the delivery of raw rubber taken by the assessee from State Trading Corporation, Chennai before dispatch of goods to the factories outside the State is an inter-state sale.4. Whether the purchase and transportation of goods outside the State by the assessee were part of the sale transactions.5. Whether the Tribunal was correct in affirming the order of the Appellate Assistant Commissioner that the raw rubber taken delivery by the assessee from the State Trading Corporation and transported to its registered office, Hindupur is an interstate transaction, not an intra-state transaction.6. Whether the transaction of the assessee with the State Trading Corporation would amount to the last purchase of raw rubber in the State of Tamil Nadu and liable to tax as such.Detailed Analysis:Issue 1:The Tribunal found that the petitioner had taken delivery of raw rubber from the godown of the State Trading Corporation at various locations in Madras and dispatched the same to their factories outside the State. The Tribunal concluded that these transactions were inter-state sales, integral to the contract, and thus assessable under the Central Sales Tax Act.Issue 2:The Tribunal ruled that the sales by the State Trading Corporation to the petitioners were inter-state sales. The movement of goods from Tamil Nadu to other states was part of the contract, making the transactions taxable only in the hands of the State Trading Corporation under the Central Sales Tax Act.Issue 3:The Tribunal affirmed that the delivery of raw rubber taken by the assessee from State Trading Corporation, Chennai, before dispatch to factories outside the State, constituted inter-state sales. The Tribunal relied on the fact that the manufacturing units were located outside Tamil Nadu, and the movement of goods was integral to the contract, thus falling under the Central Sales Tax Act.Issue 4:The Tribunal held that the purchase and transportation of goods outside the State by the assessee were part of the sale transactions. The Tribunal noted that the delivery orders and entry permits were in the name of the factories situated outside Tamil Nadu, confirming the inter-state nature of the transactions.Issue 5:The Tribunal affirmed the order of the Appellate Assistant Commissioner, stating that the raw rubber taken delivery by the assessee from the State Trading Corporation and transported to its registered office in Hindupur was an interstate transaction. The Tribunal found that the movement of goods was an incident of the sale, making it an interstate sale.Issue 6:The Tribunal rejected the Revenue's claim that the transaction amounted to the last purchase of raw rubber in Tamil Nadu and was liable to tax as such. The Tribunal concluded that the transactions were inter-state sales, integral to the contract, and thus assessable under the Central Sales Tax Act.Conclusion:The Court dismissed the Revenue's Tax Case (Revision), confirming the order of the Tribunal. The Court held that the transactions in question were inter-state sales, integral to the contract, and thus assessable under the Central Sales Tax Act. The Court distinguished the present case from a previous decision involving similar circumstances, noting that the facts of the present case supported the Tribunal's findings. The Court applied the law declared by the Apex Court, confirming that the movement of goods was an incident of the sale, making the transactions inter-state sales.