TaxTMI 
TaxTMI 
1981 (7) TMI 204
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....jarat who had been issued cards under a scheme called "Export Promotion Scheme" entitling them to buy specified quantities of art silk yarn from specified manufacturers. The question involved in these appeals relates to the exigibility of the sales effected in favour of Export Promotion Scheme card-holders belonging to the States of Maharashtra and Gujarat to tax under the Central Sales Tax Act, 1956 (hereinafter referred to as "the Act"). The assessment years are 1962-63, 1963-64 and 1964-65. The details of the Export Promotion Scheme for distribution of art silk yarn referred to above were these: There were certain weavers in India who were entitled to an incentive in the form of import licences to import art silk yarn from abroad. The said import entitlement was cut to a certain extent and indigenous art silk yarn at concessional price was allotted to them. To regulate the scheme of allotment, a committee called the "Art Silk Yarn Distribution Committee" was constituted by the Government of India. The committee made allotments to different weavers by issuing allotment cards. These allotment cards contained details of the quantity of allotment and the rayon yarn manufacturer fr....
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....s filed by the appellant against the order of assessment for the year 1964-65 and of the revised assessment for the years 1962-63 and 1963-64 before the Appellate Assistant Commissioner (Commercial Taxes), Coimbatore, the orders passed by the Joint Commercial Tax Officer were affirmed. The appellant then filed three appeals before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, against the orders passed in appeal by the Appellate Assistant Commissioner. The Tribunal also held that the sales in favour of the Export Promotion Scheme card-holders outside the State of Tamil Nadu were inter-State sales and were liable to be taxed under the Act. Aggrieved by the orders of the Tribunal, the appellant preferred three revision petitions before the High Court of Madras. These petitions were dismissed. Thereafter the appellant has come up in appeal to this Court by special leave. Section 3(a) of the Act provides that a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase occasions the movement of goods from one State to the other. In order to substantiate its case, the appellant has placed b....
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....les tax for which purpose you are required to send us immediately your regular 'C' form correct in all respects as required by the law in force for the time being in the absence of which you are required to remit us balance sum of Rs.......being the difference between the rate charged and the revised rate at 10 per cent applicable in such case." But actually 2 per cent tax was added and it was shown in the invoice as local sales tax of Maharashtra at 2 per cent of the price. A delivery order dated June 3, 1964, prepared by the agent at Bombay on behalf of the appellant also refers to the numbers of the cases containing goods as 6829, 8479 and 8505. What is of significance is a letter dated May 23, 1964, written by the agent at Bombay to the appellant. By that letter, the agent requested the appellant to send from the factory 69 cases of yarn bearing specific numbers including cases Nos. 5829, 8479 and 8505. The said letter further stated that the invoices of sale would be sent after the goods were sold by the agent. What is attempted to be made out by the appellant is that the appellant was informing its agent at Bombay from time to time as and when goods were manufactured the nu....
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.... site of the appellant to Bombay for delivery to the purchaser as a result of the contract of sale established in accordance with the terms of the allocation card. It is, however, argued on behalf of the appellant relying upon the decision of this Court in Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes, Jamshedpur [1970] 26 S.T.C. 354 (S.C.)., that the sale effected by the appellant's agent at Bombay could not be treated as the immediate cause of movement of goods from the State of Tamil Nadu to the State of Maharashtra or the State of Gujarat, as the case may be. The facts in the aforesaid case are distinguishable from the facts in the present case since it was held in that case that the procedure followed by the manufacturer, the appellant in that case together with the absence of any firm orders placed by the purchasers indicated that there were no transactions of sale within the meaning of section 2(g) of the Act and assuming that any firm orders had been received by the appellant therein, they could not be regarded as anything but mere offers. This Court further held in that case that the appropriation of goods was done at the appellant....
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....a Ltd. v. state of Haryana [1973] 32 S.T.C. 629 (S.C.). relied on by the appellant has also no bearing on this case. The assessee in that case had its factory where it manufactured refrigerators at Faridabad in the State of Haryana and it moved the goods manufactured by it to its godown at Delhi. The excise pass utilised for such movement was always in favour of self. During the transport of goods, the assessee paid octroi payable for bringing goods into Delhi. At Delhi, the assessee sold the goods to its distributors. The Court on a consideration of the material before it held that even though there were prior distribution agreements entered into between the assessee and its distributors, the goods in question had not been moved pursuant to the said agreements from Faridabad to Delhi, and hence there was no inter-Sate sale. The facts of this case are, however, close to the facts in English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 S.T.C. 475 (S.C.). Here also the assessee had its factory in the State of Tamil Nadu. Its registered office was at Calcutta but it had branch offices at Madras, Bombay and other places. A Bombay buyer wrote to the Bombay....
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....o the contract of sale. When a branch of a company forwards 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 the 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 of inter-State movement the goods move only to reach the buyer in satisfaction of his contract of purchase and such a nexus is otherwise inexplicable, then the sale or purchase of the specific or ascertained goods ought to be deemed to have taken place in the course of inter-State trade or commerce as such a sale or purchase occasioned the movement of the goods from one State to another. The presence of an intermediary such as the seller's own representative or branch office, who initiated the contract may not make the matter different. Such an interception by a known person on behalf of the seller in the delivery State and such person's activities prior to or after the implementation of the contract may not alter the position." In the instant case, the allocation card was first....