TaxTMI 
TaxTMI 
TaxTMI 
2008 (1) TMI 841
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....referred to as, "the OST Act") and Central Sales Tax Act, 1956 (hereinafter referred to as, "the CST Act") in the State of Orissa. In West Bengal, the company is also registered both under the local Sales Tax Act and CST Act. For the purpose of its business, the company appoints stockists in the State of West Bengal. For appointment of stockists, the company has circulated printed form and the persons intending to be appointed as stockists are required to fill up and submit the said printed form to the branch office of the petitioner in West Bengal. In the said format/application form the persons intending to become stockists are required to give various information including their financial position, i.e., how much they can invest and how much cement they require in a month. The company after manufacturing cement effects sale of cement inside the State of Orissa. In regular course of business and in a continuous process the company also transfers cement in railway racks to its branch at Kolkata under self-railway receipts. The branch office of the petitioner at Kolkata endorses the railway receipts in favour of the clearing and forwarding agents appointed by the company. The cle....
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....Sales Tax, Sambalpur, who relying upon clauses 21 and 22 of the application form circulated by company for appointment of stockists, came to a conclusion that privity of contract for sale of cement existed between the company and the stockists and accordingly dismissed the first appeal. Against the first appellate order, the petitioner preferred second appeal before the Orissa Sales Tax Tribunal, Cuttack (hereinafter referred to as, "the Tribunal") in S.A. No. 124 (C)/95-96. The appeal was heard by a Full Bench of the Orissa Sales Tax Tribunal and by order dated February 20, 1997 the learned Tribunal disposed of the said appeal with the following observation: "Considering these factors along with others, it is not disputed that the stockists were appointed. The learned Advocate for the dealer contended before us that stock of cement never moved to West Bengal/Calcutta as a result of information furnished by the stockists. But, we are unable to agree with such contention of the learned Advocate when admittedly it is on the basis of appointment of stockists, the goods so dispatched from Orissa to West Bengal were ultimately delivered to them (ultimate purchasers), the purchasers we....
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....t Kolkata is an inter-State sale. The learned counsel for the Revenue also cited a judgment of the honourable Supreme Court in the case of Balabhagas Hulaschand v. State of Orissa reported in [1976] 37 STC 207. Assailing the above contention of the Revenue, learned counsel for the petitioner argued that the facts of the case in Sahney Steel and Press Works Ltd. [1985] 60 STC 301 are completely different from the case of the petitioner and that the principle decided by the honourable Supreme Court in the case of Balabhagas Hulaschand [1976] 37 STC 207 supports the case of the petitioner. Concluding his argument, learned counsel appearing for the petitioner submitted that the question formulated by the High Court may be answered in favour of the petitioner and against the Revenue by holding that cement transferred from Bargarh to Kolkata was on branch transfer basis and not an interState sale. The only question to be determined in this case is whether the dispatch of stock of cement by the petitioner from its factory situated at Bargarh in the State of Orissa to its branch in the State of West Bengal is a sale in course of inter-State trade as contemplated in section 3(a) of the CST....
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....nt to contract (ii) mutual assent, (iii) transfer of property in the goods from the seller to the buyer, and (iv) a price money paid or promised. If these conditions are fulfilled, then a completed sale takes place. (b) Such completed sale should occasion the movement of goods from one State to another." Section 6A of the Central Sales Tax Act which is also relevant reads as follows: "6A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale.-(1) Where any dealer claims that he is not liable to pay tax under the Act, in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be, and not by reason of sale, the burden of proving that the movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of the other place of business, or h....
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....ry to the stockist. He further submitted that in regular course and in the continuous process, the petitioner transfers/dispatches cement in railway racks to its branch at Kolkata under self-railway receipts. The branch offices of the petitioner at Kolkata endorse the railway receipts in favour of clearing and forwarding agents appointed by the petitioner. The clearing and forwarding agents after taking delivery of the cement carry the same to different dumps taken under rent by the branch office of the petitioner where the cements were stored. Thereafter only the stockists appointed by the petitioner for the State of West Bengal as well as other dealers/persons purchased cement from the godown/dump of the branch office of the petitioner at Kolkata as per their need/requirement. The learned counsel for the Revenue vehemently opposed the said submission of the learned counsel for the petitioner that there was no nexus between the dispatch of cement in question from the factory in the State of Orissa and purchase of cement by the stockists in the State of West Bengal. Referring to clauses 21 and 22 of the application format circulated by the company for appointment of stockists he a....
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.... quantity of cement moved from Orissa. The contention of the petitioner before the Tribunal that stock of cement never moved to West Bengal as a result of information furnished by the stockist was not accepted by the Tribunal on the ground that the goods were dispatched from the State of Orissa to West Bengal and ultimately delivered to the pre-identified stockist. With the above observation, the Tribunal came to the conclusion that the forums below were justified in holding such transaction to be in course of inter-State trade and commerce subject to levy of tax under the CST Act. We are unable to accept this finding of the learned Tribunal since the Revenue has miserably failed to establish inseparable link between the dispatch of cement in question from its factory at Bargarh in the State of Orissa to its branch in West Bengal and thereafter sale of cement by the branch office to the stockist. The further case of the petitioner is that the claim of branch transfer of 74,829.2 MT of cement valued at Rs. 14,21,40,127 from its factory at Bargarh in the State of Orissa to its branch office in West Bengal was duly covered by form "F" declaration as prescribed under rule 12(5) of th....
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.... be a contract of sale preceding the movement of the 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 . . ." In the aforesaid case, Kelvinator of India Ltd. entered into three separate distributorship agreements with three companies for sale of refrigerators manufactured by it. The refrigerators manufactured by the M/s. Kelvinator of India Ltd., moved from Faridabad to Delhi which were received at Delhi by the registered office of M/s. Kelvinator of India Ltd., and thereafter those were sold to the companies who had entered into the distributorship agreement with M/s. Kelvinator of India Ltd. The honourable Supreme Court held that three agreements between the assessee and the distributors were merely agreements for distribution of refrigerators and were not agreement for sale between the parties and it could not be said that there was any movement of refrigerators from Faridabad to Delhi under contract of sale. The transaction between M/s. Kelvinator of India Ltd., and the distributors does not constitute any sale in course of inter-State trade or commerce and, therefore, there was no liability to pay ....