TaxTMI 
TaxTMI 
2007 (10) TMI 563
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.... levied on those transactions. At the same time Pondicherry authorities have treated those transactions as intra-State sales within Pondicherry and have levied State sales tax on them, which the appellant has already paid. The appellant has also mentioned that it is being taxed twice with respect to the same transactions. Facts of the case: The appellant has stated that it has a number of branches located in different parts of the country and the transfer of goods from one branch to another takes place in the ordinary course of business. During the year 1994-95, the appellant had effected stock transfers of refrigerators and washing machines from Chennai to other branches located in Bangalore, Chandigarh, Cochin, Hyderabad, Mahee, Pondicherry, Vishakhapatnam and Zirakpur, all of which are outside the State of Tamil Nadu. It showed these transactions as stock transfers in its monthly returns filed with the sales tax authorities of Tamil Nadu. The appellant also furnished F forms, along with movement details of the goods in question in order to discharge the burden of proof cast on it by the Central Sales Tax Act, 1956 (for short, "the CST Act"). But by the assessment ord....
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....de or commerce.--A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase,-- (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods, during their movement from one State to another. . . . " This section has two Explanations also, but we are not concerned with them in this case. It is seen from the above that this section envisages two different ways in which inter-State sale can take place. These are indicated in clauses (a) and (b) above. In the present case we are concerned with clause (a), as the case of the respondents is that goods moved in pursuance of sale/agreement to sell. The interpretation of this provision fell for the consideration of the Supreme Court for the first time in the case of Tata Iron and Steel Co. Limited v. S.R. Sarkar [1960] 11 STC 655, a five-judge Bench of this court held as follows (page 666): ". . . A sale being by the definition, transfer of property, becomes taxable under section 3(a) if the movement of goods from one State to another is under a covenant or incident of the contract of sal....
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....llans, stock and sale particulars relating to the branch, statement of one Shri P.V. Subramanian, etc. At the time of hearing, the counsel for the appellant also explained the contents of these records at random in the presence of the counsel for the respondents. We may now advert to the conclusions in the impugned order which read as under: "We have seen from the materials available in the assessment record as well as the inspection report and the depositions recorded therein, that the Pondicherry branch procured orders from prospective buyers in the Union Territory of Pondicherry and forwarded them in the form of delivery challans along with the blank cheques to Chennai for realisation. The appellants in Chennai after presenting and getting the cheques realised in their favour, raise sales invoices in the name of the actual buyers in Pondicherry with specific details of size, color, compressor No., machine No., etc., and dispatched them to Pondicherry. No doubt that the goods moved in pursuance of the orders placed by the buyers in Pondicherry and realisation of the sales consideration took place at Chennai. It is pertinent to note that the branch at Pondicherry has no aut....
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....erry branch ascertained the local requirements and communicated the same over phone to Chennai branch which dispatched goods to Pondicherry. The appellant in its reply dated September 1, 1999 denied this allegation. It stated that the Chennai branch received goods in the regular course of business from Mumbai, Delhi and other places, and in turn, made regular stock transfers to various southern States. The goods moved along with stock transfer challan in form XX. The names of the prospective buyers are not at all found therein. The goods along with the documents were handed over to the transporter who prepared a goods consignment note. In all such documents, Godrej GE Appliances, Pondicherry was shown as the consignee. On receipt of the goods, the Pondicherry branch made endorsement on the reverse side of the goods consignment note, on the basis of which, the Chennai branch paid freight to the transporter. The Pondicherry branch took the goods in its stock and made necessary entries in the stock register. The local buyers placed orders with the Pondicherry branch which supplied the goods locally out of the stock available with it. After delivery of goods, delivery challans were sen....
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....hat supplies were made from Chennai as per specifications of the ultimate buyers as per the orders/ challans. Para 6, on the other hand, states that after effecting the delivery at Pondicherry, that branch forwarded a copy of the delivery challan to Chennai branch for preparing sales invoice. It is noticed that the order/challan, inter alia, contained the size, colour and other details about the machines sold to the buyer. Regarding the order/challan, the appellant stated in its reply that the same was prepared at the time of delivery of goods and sent to Chennai for preparing sales invoices. During the course of hearing before us the appellant produced records which showed that order/challan was prepared at the time of delivery of goods to the buyers at Pondicherry and subsequently sent to Chennai. The appellant also filed an affidavit to this effect. On perusal of various records, we have also noticed that the expressions "delivery challan" and "order/challan" have been used interchangeably. Number & specification of goods.--Another allegation in the showcause notice is that verification of orders/challans revealed that supplies were made from Chennai in the ....
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.... the appellant produced a comparative statement of existing stock, stock received from Chennai and sales made by the Pondicherry branch on a particular day. The statement showed that Pondicherry branch always had sufficient stock available with it and it was not dependant on fresh supplies from Chennai for making deliveries to its customers. Earmarkings--Yet another allegation contained in the show-cause notice is that the stock transfer invoices prepared at Chennai bore initials of the Pondicherry buyers, i.e. FS (for fridge sale), HE (for Hassan Enterprises) and L.A. (for Lakshmi Enterprises). This shows that the goods had been earmarked for particular buyers at Chennai itself. The appellant denied this and offered to produce the entire stock transfer invoices. We do not find any further discussion on this issue either in the assessment order or the appellate order. But, it is seen from the impugned order that the departmental representative had raised this issue before the State Tribunal. She had contended that the verification of the records of Pondicherry branch had revealed that the stock transfer invoices of Chennai bore initials of the buyers--a fact which is factually inc....
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....he same effect. But the appellate order as well as the impugned order records that the Chennai branch after getting the cheque realised, made sales invoice and dispatched the goods. The appellant in its affidavit has declared that cheques were encashed after delivery of goods. We also noticed the same on perusal of detailed statement furnished by the appellant on the basis of record. Two related questions arise here. The first is why cheques were sent to Chennai? We notice that the admitted position of the parties is that the appellant did not have a separate bank account at Pondicherry till August 31, 1994. It opened bank account there only on September 1, 1994 from which date cheques started to be encashed at Pondicherry itself. We are, however, concerned only with the period up to August 31, 1994 in this case. The second question is why blank cheque? When cheque was taken at the time of delivery of goods, the price thereof should have been known. Therefore, it was possible to fill in the exact price of the goods sold. The appellant's response is that blank cheques were taken as security as the appellant extended credit line to its dealers. It did not always realise the ex....