TaxTMI 
TaxTMI 
1972 (2) TMI 83
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....pose of the appeals filed by the assessee so that this court can have the benefit of its findings in disposing of the writ petitions. The appellate authority has since disposed of the appeals and affirmed the revised assessment orders passed against the assessee, which are impugned in these petitions. The details of disputed turnovers in all the three years are as follows: 1963-64 Rs. 9,05,786.55 Branch transfer treated as inter-State sales. 1964-65 Rs. 17,65,846.93 do. 1965-66 Rs. 6,17,290.61 Local sales made to Tyresoles Concessionaries Private Ltd. treated as inter-State sales. Rs. 70,74,433.75 Branch transfer treated as inter-State sales. Therefore, the question for consideration in these writ petitions is as to whether the revision of assessments made by the assessing officer for the three years is justified on the facts and circumstances of these cases. The taxable turnover as originally assessed, the turnover as revised and the disputed turnover in respect of each of the years are given below: -------------------------------------------------------------------------- W.P. Year of Original Revised Disputed No. assessment turnover turnover turnover ....
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....whether the sales by the assessee made during the year 1965-66 to the said Tyresoles Concessionaries (P.) Ltd. are inter-State sales as has been held by the assessing officer. The assessee-company has got its factory in Thiruvottiyur in the State of Tamil Nadu and it is a manufacturer and dealer in tyres, tubes, tread rubber, etc. It has also a head office at No. 175/1, Mount Road, Madras-2. The head office makes out annually a production programme and sales forecast and sends its production schedule each month to its factory to be effected for the following months. This schedule indicates as to how much of the manufactured articles was meant for export, for general market and for supply to original equipment manufacturers. According to the assessee, it manufactures tyres not only to cater to the needs of the general market but also to cater the requirements of the original equipment manufacturers, i.e., manufacturers of automobile vehicles such as cars, trucks, jeeps, etc., who use tyres and tubes as parts of the ultimate products manufactured by them. It is stated that reduced prices are charged in respect of the supplies made to them as they happen to take bulk supplies. At t....
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....uthorities had assumed that the letters and figures on the left hand top of the pro forma invoices sent by the head office to its depots in various places refer to the details of the earlier orders placed by the buyers. But it has been explained by the assessee that it refers to the serial number of the despatch to a particular destination. For instance, the details P.I. No. BY/238/65 given in the left hand top of the pro forma invoice dated 11th September, 1965, are said to indicate that it is a pro forma invoice in relation to 238th consignment sent to Bombay in the year 1965. We accept the explanation that the said details indicate only the details of the consignments sent to a particular depot and that they do not refer to any preexisting order said to have been placed by the buyer. The finding of the assessing authority that in all the cases there has been prior orders in pursuance of which the consignments were sent by the head office to its depots appears to be without any basis and it cannot be accepted without any material to support it. The assessing officer has not given the details of any prior orders though he has proceeded on the basis that there have been prior order....
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....pots only for effecting delivery to the named buyers and the despatches though called stock transfers were really inter-State sales, having regard to the fact that the movement of the goods has been occasioned by the orders that might have been placed by these named buyers. As already stated, it has not been shown that there has been any prior order placed by the named buyers or by the original equipment manufacturers before the consignments were despatched by the head office to its depots. Even if some of the consignments have been sent as a result of certain orders placed by the buyers with the depots, unless the despatches are specifically intended for the supply to that particular purchaser, it cannot be taken that the consignment was in pursuance of the orders placed. As a matter of fact, in most of the cases the consignments have been taken to their stocks by the depots and have been sold to various persons including those whose initials have been put there in the consignments. Though the assessee has produced before the assessing and the appellate authorities all the pro forma invoices which would make up the disputed turnover, they have not referred to them in detail. With ....
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....number of the consignment shown in the left hand top of the pro forma invoices as the number of the order placed by the out-of-State buyer. After a perusal of the records available in the case, we are of the view that the pro forma invoices do not refer to any prior contract of sale as has been assumed by the assessing authority. Therefore, it has to be taken that the despatches made by the head office to its depots, except the said limited number of cases, were not in pursuance of a prior contract of sale entered into by the out-of-State buyer either with the head office or with the depots. The learned counsel also contends that, even if the consignment sent to depots are taken to be inter-State sales, unless there is appropriation of the goods within the State towards the prior contract of sale, they cannot be taxed as inter-State sales by this State, that in these cases the appropriation had taken place only when the assessee's depots situate outside the State apportioned the goods consigned to them to the various buyers and that the despatches made by the head office to its depots cannot, in any sense, be treated as amounting to appropriation towards the contract of sale entere....
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....he Central Sales Tax Act, expressed the view thus: "Once the character of the transaction is determined by the proper tests we mentioned, to be inter-State, the next question will be where is its situs or which is the appropriate State to bring it to tax. That will take us to section 4(2). Where a sale or purchase occasions inter-State movement of goods, it may be comparatively easy to fix its situs. The situs of goods at the time when the contract of sale, which occasions the inter-State movement thereof, is made or at the time of appropriation of the goods, if they are unascertained or future goods, is made to the contract of sale by the seller or buyer, will be the situs of the sale or purchase and, therefore, the State in which such situs is situate will be the appropriate State entitled to bring the transaction to tax. The assent to appropriation may be prior or subsequent to it. That means the appropriation for purposes of section 4(2) need not necessarily be accompanied by the assent of the party concerned. Appropriation of unascertained or future goods may be in a variety of ways. It may be by earmarking the goods with reference to a particular contract of sale or purcha....
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....anufactured in a factory at Dalmiapuram and to dispose of it in accordance with the directions of the Corporation. During the year 1961-62 large quantities of cement had to be sent to Calcutta by the assessee under the directions of the Corporation and authorisations to purchase and sell cement were accordingly issued by the Corporation to the assessee. Pursuant to these authorisations which enabled the assessee to sell the quantity of cement mentioned therein to the persons in whose favour the authorisations were issued, several tons of cement were shipped by the assessee from the port of Cuddalore to its Calcutta branch. The Calcutta branch authorised its clearing agents to clear the goods, and to deliver to the respective allottees at the jetty or dock such quantities of cement fixed by the Corporation under the letters of allotment and to collect the price from the purchasers. The question was whether these sales could be charged to tax by the Madras State under the Central Sales Tax Act, 1956. It was held that as the purchasers or allottees could not identify their goods until they were separated from the bulk and delivered to them by the assessee's agents under express author....
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....tched from the factory to the stock-yards outside the State, those orders could be regarded only as mere offers to purchase in view of the fact that it was always open to the assessee to supply or not to supply the vehicles. As per this decision, the relevant test of taxability of the transaction by this State is to find out whether the sale is completed inside the State by appropriation of the goods to the contract and if the appropriation has taken place outside the State, then the sale cannot be taxed as an inter-State sale by this State from which the goods have moved in view of the specific provision in section 4(2) of the Central Sales Tax Act. The assessing authority, however, has relied on the decision in English Electric Co. of India Ltd. v. Deputy Commercial Tax Officer[1969] 23 S.T.C. 32., in support of the revised assessments. In that case, the assessee's main factory was at Madras and its head office at Calcutta and branches at Bombay, Delhi, Madras and Lucknow. The State of Madras sought to levy sales tax on the assessee under the Central Sales Tax Act in respect of sales of which the contracts to sell goods were made by the branches of the assessee. In respect of ....
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.... a loss to know as to how the above decision will apply to the facts of this case which are entirely different. It is not shown that there existed any prior contract of sale before the despatches were made by the Madras office to its depots outside the State. The goods consigned to its depots by the assessee had been taken to their stocks and thereafter supplied to the various buyers with reference to their requirements as well as the availability of the stocks in the depot. The mere fact that the consignments bore the initials of some of the buyers or the code word "O.E." will not mean that there is a completed transaction of sale in Madras by appropriation of the goods towards any contract. In English Electric Co. of India Ltd. v. Deputy Commercial Tax Officer[1969] 23 S.T.C. 32., the goods have been consigned directly to the buyer's place though the consignment was in the name of the assessee's branch office which was required to hand over the railway receipts duly endorsed after collecting the price. The fact that the railway receipts were taken showing the branch office as the consignee will only show that the right of disposal was retained by the Madras office, the appropriat....
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....of sale which required the seller to move the goods from this State to various places outside the State as a direct result of the contract of sale. It appears that in some of the transactions the branch office of the Tyresoles Concessionaries (P.) Ltd., Bombay, took delivery of the goods and despatched the goods to various other places, and that in some others the assessee itself had despatched the goods to the out-of-State destinations, though such despatches are said to have been made on behalf of or at the instructions of the buyer's branch office at Madras. But, in both the types of cases the transport charges have been borne by the seller. From this fact it is possible to infer that the seller has undertaken the obligation of transporting the goods from Madras to the outside destination as part of the contract to supply the goods to the buyer. But it is contended on behalf of the assessee that it agreed to bear the transport charges by way of a concession so that the buyer could get the goods at Bombay and other places at competitive prices. Whatever may be the reason for the seller agreeing to bear the transport charges, the fact is that the buyer has asked the seller to a....
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....lling under section 3(a) of the Central Sales Tax Act. However, in some transactions the Madras office of the buyercompany seems to have taken delivery of the goods. Some of the letters by the assessee addressed to the buyer-company show this. The assessee's letters dated 11th May, 1965, and 15th May, 1965, addressed to the buyer's office at New Delhi and Jullundur respectively are as follows: "We thank you for your order No. 196 of 7th May, 1965, calling for the supply of 200 kgs. 64-66-18-slab. We are making necessary arrangements to have your requirements manufactured and shall make them available to your Madras office with the least possible delay." "We thank you for your letter No. JF. MRF: TPO: Order No. 31/410 dated 12th May, 1965, calling for the supply of 350 kgs. 64-64-16-20 and 100 kgs. 64-16 slabs. Necessary arrangements are being made with our factory to have your requirements manufactured and we hope to make them available to your Madras office with the least possible delay." It is possible in these cases to say that the buyer's office at Madras has taken delivery of the goods and that the bargain between the parties was to effect delivery at Madras....