TaxTMI 
TaxTMI 
2013 (12) TMI 1229
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....d from State Trading Corporation of India Ltd., Madras. However, sales had been disclosed as inter-State sales by State Trading Corporation of India Ltd. and offered for assessment under the Central Sales Tax Act in the assessment of State Trading Corporation of India Ltd. and assessed at concessional rate of 4%, as the sales were covered by Form C. 3. The Assessing Officer pointed out that though the purchases were made locally, by manipulating certain records, treating it to be an inter-State transaction, State Trading Corporation of India (hereinafter referred to as "STC") started paying tax at 4%. On going through the application of allotment of raw rubber by STC and on the allegation made, the Assessing Officer came to the conclusion that the transaction in question was, pure and simple, a local transaction, assessable under the Tamil Nadu General Sales Tax Act. The payment of sales tax at 4% on the 'C' Form produced, did not alter the character of the transaction. He further pointed out that on receipt of the allocation order, the Manager Purchases (Import) of the assessee company, addressed STC, enclosing the Demand Draft towards the value of the consignment allot....
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....r se, would not make the movement, an inter-State movement. In the absence of any material to show that the allocation was with reference to Kottayam, Kerala and Goa, the movement could not be held as one in pursuance of the contract of sale. Thus the First Appellate Authority confirmed the order of assessment. 6. Aggrieved by this, the assessee went on appeal before the Tamil Nadu Sales Tax Appellate Tribunal. It is a matter of record that at the time of passing the assessment order in respect of the assessment year 1989-90 dated 31.03.1991, the Assessing Officer imposed tax on the differential rate at 1%, keeping in mind the tax already levied at the hands of STC charged at 4%. The assessment levying 1% tax was however sought to be revised by order dated 02.08.1996, to levy tax at 5%. Thus the assessee once again went on appeal before the various forums. The Tribunal confirmed the order of assessment as well as the First Appellate Authority's order. Thus as against the order of the Tribunal in respect of the assessment year 1989-90, T.C.No.1717 of 2008 is now before us. So too, as against the order dated 02.08.1996, which went on appeal before the Tribunal, T.C.No.2115 of ....
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....on order showed that the contract of sale got concluded from the delivery of raw rubber to the transporter by the appellant as per the terms and conditions of allotment. The Tribunal pointed out that there was no clause in the allocation order or any subsequent agreement specifying that the delivery instruction to despatch the goods to Kottayam or Goa, was an incidence of sale. Referring to the reliance placed on the remittance slips and the delivery order mentioning MRF Limited as the consignee, the Tribunal held that the lorry receipt could not be given any weightage, to accept the claim of the assessee that it was only an inter-State sale. The Tribunal held that after taking delivery of the goods, the assessee had transported the goods from ex-godown at Virugambakkam to its Branch Office at Kerala and Goa through Kerala Transport Company. Considering the fact that the assessee had not obtained any allotment order or allocation order speaking about specific allotment, the claim of the assessee could not be sustained. As regards the furnishing of 'C' Forms, the Tribunal pointed out that when the purchases were made by the assessee as one Unit, the branches and factories be....
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....having resulted in a binding contract between the parties. The contract fructified only when the deliveries were effected. Prior to that, there was no concluded contract. Thus, at the time when the deliveries were effected, the contract stood concluded and on the delivery, the understanding between the parties was that there was to be movement of goods to outside the State. This is evident from the remittance made by the respective Branches for which goods were to be lifted by the assessee. In the light of the said facts, particularly the remittance subject to the delivery order, the inexplicable conclusion is that the movement was only an incidence of sale and not a post-sale direction. He further pointed out that unless there was an appropriation of goods from out of the huge lot of imported raw rubber, the sale could not be said to have taken place. In the facts of the case, only when delivery was effected for the particular quantity, there was an appropriation of the goods under the contract for the particular Unit of the assessee, which resulted in the movement of goods from this State to outside the State. Movement and delivery were inseparably connected, to satisfy the condi....
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....ing the above quantities for our Units as under: RSS-3 .. KOTTAYAM UNIT SMR-20 .. MADRAS UNIT RMA-5 .. KOTTAYAM UNIT We request you to kindly endorse this letter or alternatively the Allocation Order copy sent herewith so that the same can be submitted to STC Madras for their acceptance of respective 'C' Forms. Kindly treat this matter as urgent. A similar action was taken by your office last year. Thanking you Yours faithfully, for MRF Limited Sd/- xxxxxxx MANAGER PURCHASE IMPORTS " Thereupon, STC (Rubber Division) passed an order on 16.08.1991 by including the name of Kottayam Unit in RSS-3. Thus, contrary to the findings of the Tribunal, this document clearly proved that the allocation order clearly spelt out as to what was to be sent to Kottayam Unit. Thus the allocation order speaking on the sale thus carrying the destination as Kottayam, the movement had to be necessarily treated as an incidence of sale; consequently, the order of the Tribunal has to be set aside. 12. Per contra, learned Special Government Pleader appearing for the Revenue, pointed out to the circumstances under which the assessment had been made at the hands of the....
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....took place not later than three days from the date of purchase and the railway wagons were available. On facts, the Apex Court held that the purchase of goods and their despatch were part of the same transaction and the movement of goods from one State to another was occasioned by and was the result of or the incident of the purchases; hence, the transactions were assessable as inter-State trade and not as a local sale. In considering the question as to whether the assessment could be called as a local sale or an inter-State sale, the Apex Court pointed out that if the commission agent had purchased the goods on behalf of ex-U.P. principals in the first instance and thereafter, in pursuance of subsequent instructions, despatched the goods, the despatch instructions would be independent of the purchase instructions. Thus, there could be no live link between the purchase and despatch of goods. Consequently, the movement would have been totally unconnected with the purchase, that there could not have been an inter-State purchase. However, given the fact that the goods were purchased by the commission agent on behalf of UP principals, on despatch to such principals as per their directi....
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.... of allocation of natural rubber shows that they are general in character, that wherever there is a movement of rubber, as an incidence of sale, certainly, as per the clause, Central Sales Tax provisions would stand attracted. Therefore, the inclusion of a clause as referring to furnishing of 'C' Forms as regards inter-State sale in the general conditions, per se, would not, in any manner, pronounce on the character of the transaction that we have to deal with herein. 19. Clause 5 of the General conditions refer to "Delivery" which states that the goods would be delivered to the allottees or their authorised representatives against valid letter of authorisation, permitting the representative to receive the goods on their behalf. The said clause further states that the deliveries effected to the representatives would constitute delivery and discharge of obligation on behalf of STC. It also states that the allottees were free to examine the goods in respect of quality and weight before taking delivery at STC's godowns. The said clause reserves the right to STC to supply rubber much less than what had been allotted and also have the right to cancel the allocation or sus....
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.... that the movement had nothing to do with the transaction of sale. The application of the delivered raw rubber to any particular Unit outside the State is a matter of choice and the discretion of the assessee and the seller, at no point of time, was involved in this. On a reading of the facts herein, we have no hesitation in holding that what had been observed by the Apex Court in the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)) at page 204, would fit in with the facts of the case, that after having purchased the goods, the assessee had issued despatch instructions for movement of the goods to the other State. Thus when there is no link between the purchase and despatch, it is difficult to accept the case of the assessee that the movement is nothing but an inter-State sale. In the light of the above, the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)), in fact, advances the case of the Revenue that it is only a local sale, assessable under the Tamil Nadu General Sales Tax Act. 22. As far as the contention of the assessee that the assessment made under the Central Sales ....
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....rnative, that the purchase turnover of cotton having been subjected to tax at the last point of purchase in the State and the rate of tax also being the same, as cotton was an item of "declared goods", the very same turnover could not again be subjected to tax. On facts, this Court held that the assessee was the last purchaser in the State. However, taking note of the fact that the turnover had already been subjected to tax at the hands of the vendor and that the assessee had paid the tax to the vendor while purchasing the cotton and that when the commodity in question was "declared goods", the same could not again be subjected to tax. 24. As far as the present case is concerned, rubber was assessable under the First Schedule under Item No.74, taxable at 5%. It is not denied by the Revenue that the turnover which is now sought to be assessed at the hands of the assessee is already a subject matter of consideration at the hands of STC under the Central Sales Tax Act and tax had been collected at 4% by reason of the 'C' Form given by the assessee. Given the fact that, as per Entry 74 of the First Schedule, the same is assessable at 5%, there is a loss to the revenue to the....
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....are pleased to allot Natural Rubber in favour of the following party as per details given below:- Name of the allottee: M/s.MRF Limited. Address : Madras. CURRENT RELEASE: RSS-3 SMR-20 RMA-5 Quantity (MT) 268 803 214 Unit Price (Rs./PMT) 27900/- 27900/-24514/- Ex-Godown (Madras) (Madras) (Kerala) (Sales Tax and other local levies extra at actuals) Validity for payment : Upto 31.08.1991 total Quantity Registered (MT) : Total Qty. previously released (MT) : (Excluding this release) Total Quantity released to date (MD): In case the payment for above Allocation Order is not made by 31/8/1991 the unit price of Natural Rubber will get enhanced as under:- - RSS-3 & SMR-20 grades: Rs. 449/- per MT per month - RMA-5 : Rs. 441/- -do- The payment of RMA-5 is to be made first. STC-Madras will accept payment for RSS-3 & SMR-20 only after receipt of confirmation from STC-Cochin. Yours faithfully, for The S.T.C. of India Limited, Sd/- xxx Deputy Marketing Manager. Copy by Registered post to: M/s.MRF Limited 826, anna Salai Madras-600 002. With the request that they may approach our Branch Offices for taking delivery of the material....