TaxTMI 
TaxTMI 
TaxTMI 
1985 (9) TMI 313
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....yderabad is registered as a dealer under the Central Sales Tax Act as well as under the Andhra Pradesh General Sales Tax Act. The company is engaged in the manufacture and sale of stampings and laminations made out of steel sheets which are utilised as raw material for making electric motors, transformers and similar goods. The branches of the company are mainly engaged in effecting sales and looking after the sales promotion and liaison work. The company manufactures; (a) standard goods according to the company's own designs and specifications, (b) non-standard goods according to the designs and specifications supplied by customers. In the course of its normal business, the registered office despatches both standard and non-standard goods manufactured at the Hyderabad factory to the branches. Such transfers made by the registered office to the branches at Bombay, Calcutta and Coimbatore of non-standard goods form the subject of the instant controversy. According to the petitioner, the branch offices situate at Bombay, Calcutta and Coimbatore, which themselves are registered as dealers under the Central Sales Tax Act and under the related State Sales Tax Acts, receive orders f....
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....e Commercial Tax Officer, however, did not grant the company the further time it sought for that purpose. The petitioners state that the Commercial Tax Officer has also issued notices dated May 2, 1981 seeking to reopen the Central sales tax assessments already completed for the years 1977-78 and 1978-79. In the original assessments for those years the Commercial Tax Officer had excluded the disputed transactions relating to transfers of non-standard goods from the registered office to the branches. The petitioners, therefore, pray for the quashing of the assessment order dated May 4, 1981 made under the Central Sales Tax Act for the assessment year 1979-80, and the consequent demand of tax, in so far as the assessment order includes within the assessed turnover the value of non-standard goods transferred to the branches. The petitioners also pray for an order restraining the Commercial Tax Officer from reopening past assessments for the purpose of including such transfers in the assessable turnover. Alternatively, the petitioners pray that in the event of the transactions being held liable to Central sales tax an opportunity should be given to the company to file C forms to enab....
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....fice 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 registered office and the branch office itself is concerned with the sales despatching, billing and receiving of the sale price, the conclusion must be that the order placed by the buyer is an order placed with the company, and for the purpose of fulfilling that order the manufactured goods commence their journey from the registered office within the State of Andhra Pradesh to the branch office outside the State for delivery of the goods to the buyer. We must not forget that both the registered office and the branch office are offices of the same company, and what in effect does take place is that the company from its registered office in Hyderabad takes the goods to its branch office outside the State and arra....
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....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. The law was clarified in Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457 (SC), where this Court observed that a sale would be an inter-State sale even if the contract of sale does not itself provide for the movement of goods from one State to another, provided, however, that such movement was the result of a covenant in the contract of sale or was an incident of that contract. Two cases on opposite sides of the line were considered by this Court in K.G. Khosla and Co. Ltd. [1979] 43 STC 457 (SC). In Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 STC 354 (SC); [1970] 3 SCR 862, the appellant carried on the business of manufacturing trucks in Jamshedpur in the State of Bihar. The sales office of the appellant in Bombay used to instruct the Jamshedpur factory to transfer stocks of....
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.... to sell nor is the movement occasioned by the sale. The seller himself takes the goods to State Y and sells the goods there. This is, therefore, purely an internal sale which takes place in State Y and falls beyond the purview of section 3(a) of the Central Sales Tax Act not being an inter-State sale." It is not clear from this illustration whether the goods were particular and specific goods earmarked for delivery to the buyer when they commenced their movement from State X. Apparently not, because it is pointed out that the movement of the goods was neither in pursuance of the agreement to sell nor was the movement occasioned by the sale. The case is distinguishable from the present one where particular goods were manufactured in Hyderabad in satisfaction of an order placed by the buyer who desired delivery outside the State. The goods moved from the registered office at Hyderabad as the result of a covenant in the contract of sale or an incident of that contract that the goods manufactured at Hyderabad according to the specifications stipulated by the buyer should be the very goods delivered to him outside the State. Upon all these considerations, we are of opinion that the C....