TaxTMI 
TaxTMI 
1991 (9) TMI 315
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....r was incidental to, a contract entered into by the applicant-company of sale of the goods to the Bombay buyers? 3.. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the fifty-five transactions in dispute in Second Appeal Nos. 86 and 87 of 1976 before the Tribunal, were inter-State sales of the company in terms of section 3(a) of the Central Sales Tax Act, 1956, as between the company and the company buyers and that it was not true that all or any of the fifty-five transactions in question were sales effected by the commission agent at Bombay locally with the Bombay buyers?' 2.. In order to answer the questions referred to us it is necessary to set out relevant facts in brief: (i) The applicant-public limited company carries on the business of manufacturing and selling edible oil and oil-cakes at Bardoli. It was registered as a dealer under the Bombay Sales Tax Act, 1959, and subsequently, under the Gujarat Sales Tax Act, 1969. It was also registered as a dealer under the Central Sales Tax Act, 1956. During the relevant year commencing from 1st October, 1968 to 30th September, 1969, the applicant has entered into fifty-fiv....
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....o us, it is necessary to refer to certain concurrent findings of fact reached by all the three authorities and such findings of fact are as under: (a) M/s. C. Jivanlal & Co. was acting as commission agent of the applicant-company and the applicant-company has despatched goods to the Bombay buyers showing them as consignees in the railway receipts. (b) The applicant has not despatched/delivered the entrusted goods in question directly to the commission agent but had forwarded the goods directly to the Bombay buyers by obtaining railway receipts in their name and not in the name of the commission agent. (c) M/s. Jivanlal & Co., i.e., the commission agent, never stocked any goods of its own for sale at Bombay and that it had no godown or warehouse for that purpose at Bombay. This fact alone may not be very relevant, but taken jointly with other factors assumes relevance. (d) C. Jivanlal & Co. used to remain in constant contact over telephone with the applicant-company in respect of market price of oil-cakes at Bombay, quantity or bulk of goods required by the Bombay buyers, availability of quantity of oil-cakes with the applicant-company for supply and sale to Bombay buyers in term....
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....he Bombay buyers the fact that the applicant was the seller of the goods at any time up to entering into contract of sale all those facts were certainly made known to the applicant as well as to the Bombay buyers immediately thereafter because the applicant would be able to direct exact quantity of goods to a particular contract and forward the same from Gujarat to Bombay to a particular buyer at a particular siding and address. (1) It is also required to be noted that in all these transactions railway freight had been paid by the purchasers, i.e., Bombay buyers who had also borne other expenses while taking the delivery of the goods as consignees. (m) It is also pertinent to note that unless informed and instructed by the commission agent in advance the applicant would not have been in a position to obtain railway receipts in the name of different Bombay buyers with the addresses of their railway sidings and it would not have been possible for the applicant to move the relevant goods from Gujarat to Bombay and that too in the name of specific buyers. That there exists prior agreement of sale in each case as effected by the commission agent with the Bombay buyers on behalf of the....
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.... must be shown to have occasioned the movement of goods or articles from one State to another and that the movement must be the result of a covenant or incident of the contract of sale. It can, therefore, be said that the sale of goods is in the course of inter-State trade. If the sale or movement of goods from one State to another are integral parts of same transaction, there must be direct nexus between the sale and the movement of goods from one State to another in other words, the movement should be incident of and be necessitated by the contract of sale and thus be inextricably linked with the sale of goods. 7.. From the language of section 3(a) it is clear that the movement of goods from one State to another must be under contract of sale. The movement of goods which takes place independently of a contract of sale would not fall within the ambit of section 3(a) of the said Act. Said section further makes it clear that there must be a contract of sale preceding the movement of goods from one State to another and the movement of goods should have been caused by and be the result of that contract of sale. If there was no contract of sale preceding the movement of goods the move....
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....e moved from Gujarat to Maharashtra. It is also pertinent to note that from the fact of prior and subsequent telephonic conversation between the applicant and the commission agent (which fact does not appear to have been disputed at any stage) it becomes clear that even if the commission agent had not initially disclosed to the Bombay buyers the name of the applicant as seller of the goods at any time prior to entering into contract of sale, all these facts certainly were made known to the applicant as well as to Bombay buyers immediately thereafter. 9.. We are conscious of the fact that in a transaction of consignment for sale if the goods are moved from one place to another without there being prior contract of sale into existence, it cannot be said that the transaction of sale has occasioned the movement of goods. On facts and circumstances of each case, it shall have to be seen as to what has occasioned the movement of goods and if we come to conclusion that the movement of goods was independent of transaction of sale and was not part and parcel of the same transaction, section 3(a) would not be attracted. 10.. Where the goods are consigned for sale to commission agent or di....
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....the goods were assigned to Delhi from Faridabad there was, in fact, no contract of sale preceding the movement of goods from one State to another. 11.. In the case of State of Tamil Nadu v. Hercules Rubber Co. reported in [1983] 54 STC 85 the Division Bench of the Madras High Court was called upon to decide as to whether the transaction was in the course of inter-State sale. The assessee in that case manufactured certain goods in Madras and their branch office at Vijayawada in Andhra Pradesh. Various purchasers in Andhra Pradesh placed orders with the assessee's branch office at Vijayawada. Subsequently, at the instance of the branch office the goods were despatched by the assessee to the branch office at Vijayawada. The goods were received by the branch office at Vijayawada and the branch office took the goods into their stock. The branch office subsequently delivered the goods to the purchasers from whom the orders were received. In this situation the question arose as to whether the transactions were in the nature of inter-State sale or mere transfer of goods from one branch to another. From the mode of dealings between the parties and the fact that the goods were sent to the ....
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....ntend that the transaction was one of the inter-State sale. The Division Bench did not attach any importance to the fact that the name of the buyer having been found on the goods and found that the mere fact that the mark 'Government of Andhra Pradesh' was found on the duplicating ink tubes would not necessarily lead to conclusion that there was completed transaction of sale by the appellant in Madras to the buyers in Andhra Pradesh. The marking at best would indicate that the goods were intended for a person who had entered into a contract of purchase with the buyer in Andhra Pradesh. The court, once again, applied the test of nexus of conceivable link between the assessee and the purchaser, and found that there was no such conceivable link or nexus between the manufacturer (assessee) and the movement of goods for supply to the Government of Andhra Pradesh, especially when the goods were despatched by the assessee in the ordinary course of its business to its branch office. This decision also does not, therefore, in any way, help Mr. Joshi in making good his submission. 14.. Mr. Joshi, learned Advocate appearing for the applicant, then referred to the decision of the Supreme Cour....
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....nd that the movement of goods in the case before us was occasioned by the transaction of sale with the Bombay buyers and not independent of those transactions. In the case before us there is a link between the assessee and the ultimate Bombay buyers or between the assessee and the transaction of sale to Bombay buyers which has occasioned the movement of goods. This decision also therefore does not in anyway militate against the proposition of law which we have set out. 15.. Mr. Joshi then invites our attention to the decision of the Supreme Court in the case of State of Tamil Nadu v. Cement Distributors (P) Ltd. reported in [1975] 36 STC 389. In the said case the Cement distributors (P) Ltd. as an agent of State Trading Corporation despatched the cement to themselves to Calcutta by ship in pursuance of instructions contained in the authorisation for transfer of stocks from Madras to Calcutta. In fact, there was no transaction of sale and the court found that the movement of goods from Madras to Calcutta did not take place as a result of any contract of sale and the transaction was not inter-State sale liable to tax under Central Sales Tax Act, 1956. In fact, the goods were despatc....