TaxTMI 
TaxTMI 
1983 (4) TMI 232
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....es Tax Act were paid? and (3) Whether the transactions amounting to Rs. 5,13,968.53 are sales in the course of import and are exempt from taxation? It is convenient to refer to the facts relevant for every one of the questions stated above and to deal with them individually. Question No. (1): At the outset, it is necessary to notice that in respect of five supplies made in the debit note for a total value of Rs. 40,897.40 and also in respect of supplies to M/s. Southern Switchgear Ltd. covered by the debit note 132/68-69 dated 28th December, 1968, in the sum of Rs. 350 and in respect of supply of tools to the ancillary product manufacturers to the extent of Rs. 92,345.93, the Tribunal held that they were outright sales and therefore exigible to tax. Such finding was not challenged by the assessees and it is thus, the revision is restricted to a sum of Rs. 1,22,889.66, though the assessees contested exigibility to tax for a sum of Rs. 2,56,464.39. Therefore, we avoid reference to the particulars of transactions relied on by the Tribunal to hold that they are outright sales. The facts relevant for the disposal of this question are as follows: The assessees are manufacturers of a....
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....rials were cancelled on the supply of finished products. The second set from 1st January, 1970, to 31st January, 1970, indicated works orders for manufacture of body. The third set of documents pointed out that wages labour invoices were raised by the said Body Works on the assessees. On the above facts, the Tribunal held that the transactions between the assessees on the one hand and the ancillary product manufacturers on the other are only works contract, but are not sales. The Tribunal fortified its said conclusion on the strength of the decisions reported in P.A. Raju Chettiar and Brothers v. State of Madras [1955] 6 STC 131, South India Metal Works and Rolling Mills v. State of Madras [1960] 11 STC 507, T.P.S.R. Factory P. Ltd. v. Deputy Commercial Tax Officer [1967] 20 STC 419 and State of Madras v. Sheik Ismail and Sons [1974] 34 STC 464. In our view, the conclusion of the Tribunal is unassailable. What is relevant to ascertain whether there is an element of sale or not in the course of transactions between an assessee and the other party to the contract is the essence in such transactions, but not the form of the contract or the nomenclature given by the parties as sales ....
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....hey were paid in cash. While in the other, the facts are that the assessee collected scrap metal from its customers, melted the scrap, manufactured sheets and rings and gave back to the customers the new sheets and rings and that the identity of the new sheets and rings could not be correlated to and established with the scrap supplied by the customer and that the total weight of the scrap tallied with the total weight of the sheets and rings given to the customer. The ratio laid down by the said two precedents is to the effect that there was no element of sale when the finished products were handed over by one contracting party to the other, and is only favourable to the assessee. Question (2): The assessing authority disallowed the claim under sales returns for which credit notes had been issued by the assessees as per particulars below: 1.. Credit note No. 95 dated 24th July, 1968, for Rs. 46,175. 2. Credit note No. 27 dated 22nd November, 1968, for Rs. 1,47,219. 3. Credit note No. 48 dated 31st December, 1968, for Rs. 65,608. It is found that the original invoices issued by the respondent in favour of T.V. Sundaram Iyengar and Sons, Madurai and T.V. Sundaram Iyenga....
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....xemption claimed by the assessees was not accepted by the assessing authority; so too, in the invoice No. 289 dated 30th September, 1968, four vehicles were sold to M/s. Sundaram Motors Pvt. Ltd., Madras, for Rs. 2,14,161.92, only the credit note dated 31st December, 1968, for Rs. 95,608 relating to sales to M/s. Sundaram Motors Pvt. Ltd., Bangalore, was disallowed, though the entire invoice was cancelled and subsequent invoices were raised for the sales of vehicles. The Tribunal had perused the statement filed at the instance of the assessees with reference to the invoices and credit notes and as a matter of fact found that the original invoices had been cancelled in toto and fresh invoices had been raised for the sales of the vehicles either locally or outside the State and that tax was paid thereon under the local Sales Tax Act and the Central Sales Tax Act. On the above facts, we are unable to hold that T.V. Sundaram Iyengar and Sons, Madurai and Madras, in whose favour original invoices were issued by the assessees, have become the owners of the vehicles and in respect of these three transactions which were subsequently sold by the assessees in M/s. T.V. Sundaram Iyengar and ....
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....d. v. Commercial Tax Officer [1982] 51 STC 151, S.R.L.G.S. & W. Mills (P.) Ltd. v. State of Madras [1972] 30 STC 387 and the decision in Blue Star Ltd. v. State of Tamil Nadu (T.C. Nos. 1397 of 1977 and 196 of 1978 [1984] 56 STC 172. The facts in S.R.L.G.S. & W. Mills (P.) Ltd. v. State of Madras [1972] 30 STC 387 are as follows: The assessee in that case is a ginning, spinning and weaving mill. It had an actual user's licence to import cotton from Africa. But, for facilitating the import, the assessee gave a letter of authority to one Patel and Co. The said Patel and Co., on the basis of the letter of authority given by the assessee, entered into a contract with the foreign sellers and actually imported the goods, and thereafter delivered the same to the assessee. A Division Bench of this Court to which one of us was a party, relying upon the decision of the Supreme Court in Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes [1966] 17 STC 473 (SC) observed thus: "The Supreme Court in that decision had held that before a sale could be said to have occasioned the import, it was not necessary that the sale should have preceded the import, that if the movement of ....
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.... a letter of credit through a bank or otherwise. All the import documents would have to be in the name of the assessees who agreed to subscribe their signatures to all the papers and documents so as to make the importation possible and enable the purchaser to take delivery of the goods. But the purchaser would have to pay the amount as per the invoice of the foreign sellers and also the customs and excise dues, wharf charges, clearing and forwarding charges and all such other dues including sales tax, if any, payable. If, after receiving the premium or part of the price, the purchaser failed to take necessary steps for importation of the goods in the name of the assessees within the time allowed according to the licence or failed to utilise the licence or caused its validity to expire, the advance amount received by the assessees as part of the sale price was liable for forfeiture. The agreement also provided that the assessees were at liberty after an advance information to the purchaser to make sales of the imported goods to others or deliver the licence at their option to anybody else, if the assessees were not able to get a fair profit from the purchaser. From the above facts, ....
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....against the actual user's licence held by the customers but only on the basis of the recommendatory certificates issued by the Project and Equipment Corporation of India which is a wing of the State Trading Corporation of India. The goods had been imported after the actual users' orders but not by actual users' licences. There was no privity of contract between the local buyers and the foreign seller and the movement of the goods from the foreign country, was not occasioned on account of the actual user's licence, but only against the orders placed by the assessee with the foreign seller. The Project and Equipment Corporation had the unfettered right to nominate actual users to whom the assessee shall give priority in selling the goods. The contract in general related not only to import, but also to stocking and selling of metal testing machines from GDR to actual users only. Thus, it is on those facts, this Division Bench held that the transaction envisaged two sales, (i) between the assessee and the foreign seller and (ii) between the assessee and the actual users. If the assessee had acted as an agent either of the foreign seller or the actual user, there would be privity of....