TaxTMI 
TaxTMI 
TaxTMI 
2010 (7) TMI 882
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....Trading and Development) Cooperative Federation Limited (hereinafter referred to as, "the Federation"). They are also registered under the M.P. Tendupatta Vyapar Viniyaman Regulation, 1966 to sell tendu leaves in other States in the course of inter-State trade and commerce after paying the prescribed registration fee. They are also registered as exporters and they are required to sell tendupatta in the course of inter-State trade and commerce also. They are also registered under the M.P. Commercial Tax Act and Central Sales Tax Act as dealers. Entry No. 5 in Part III to Schedule II of the VAT prescribes payment of 25.30 per cent of tax on tendupatta. In case sale is within the State the said tax is paid to the State and in case it is inter-State trade and commerce then the Central sales tax is required to be paid in absence of C form. The State is realizing the VAT on the transaction in question. Their right is adversely affected in carrying out inter-State trade. The rate of tax on tendupatta was revised as per the Schedule (P5). The transaction was of inter-State sale. The transaction is covered by the decision of the apex court in the case of State of Orissa v. K.B. Shah & Son....
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....Act, 2002 and not under the M.P. Commercial Tax Act, 1994 as the work orders were issued after April 1, 2006. In the return filed by the respondents which has been adopted in other writ petitions also, it is contended that the inter-State sale has been defined under section 3 of the Central Sales Tax Act. The transaction in question is intra-State sale. Reliance has also been placed on section 4 of the Central Sales Tax Act, 1956 which provides that when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. From the purchase agreement, it is apparent that it is not the case of inter-State sale. The movement of goods is not incidental to the sale. There was no condition expressed or implied to that effect in the agreement. None of the conditions to make it as inter-State sale stands satisfied; it cannot be inferred from section 11 of the M.P. Tendupatta Adhiniyam, 1964 (hereinafter referred to as, "the Adhiniyam 1964") read with rule 8 of the M.P. Tendupatta (Vyapar Viniyaman) Niyamawali, 1966 (hereinafter referred to as, "the Regulation 1966"). T....
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....se- (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. Explanation 1: Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2: Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State." It is necessary that the sale or purchase transaction must occasion the movement of goods from one State to another State as required under section 3(a) of the Central Sales Tax Act, 1956. Such movement may be express, implied or incidental and inseparably connected with the transaction. At the outset, it is considered appropriate to state that it is the question of fact depending upon the transaction in question whether it would be a case ....
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....er under the contract of sale. On the facts, it was found that the contract itself involved the movement of goods from the factory to the purchaser, i.e., across the border from one State to another because the factories were outside the State of Mysore and, therefore, the transactions were clearly transactions of sale of goods in the course of inter-State trade or commerce. In Singareni Collieries Co. Ltd. v. Commissioner of Commercial Taxes, Hyderabad [1966] 17 STC 197 (SC); AIR 1966 SC 563, the assesseecompany in Andhra Pradesh supplied coal to allottees outside the State pursuant to the directions of Coal Commissioner issued under the Colliery Control Order, 1945 and it was held to be a transaction to be that of interState sale. In the said case, the coal was transported from the colliery of the company to the consumers outside the taxing State, as a result of the covenant or incident of the contract of sale and, therefore, the sale must be regarded as an inter-State sale and not liable to be taxed under the said Act. In K.G. Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes, Madras Division, Madras [1966] 17 STC 473 (SC); AIR 1966 SC 1216, it was quite clea....
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....iri Plantation Co., Coonoor v. Sales Tax Officer, Special Circle, Erunakulam [1964] 15 STC 753 (SC); [1964] 7 SCR 706, this court had to consider what sales are sales in the course of export and what sales are for the purpose of export. In the course of the judgment, Shah, J. (one of us) observed: 'A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export, and there must be an actual export. The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them, or even from the nature of the transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one i....
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.... of the agreement and that was for the specific purpose of transporting crude oil to Barauni from Assam. On facts, it was held that there should be movement of goods from the State of Assam to the State of Bihar in pursuance to the contract of sale. In other words, the movement of crude oil from the State of Assam to the State of Bihar was incidental to the contract of sale. The inter-State movement must be the result of a covenant express or implied in the contract of sale or an incident of the contract. It is not necessary that the sale must precede the interState movement in order that the sale may be deemed to have occasioned such movement. It is not necessary for a sale to be deemed to have taken place in the course of inter-State trader or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It would be enough if the movement was in pursuance of and incidental to the contract of the sale. In Keluram Ramkaran v. State of Orissa reported in [1976] 2 SCC 44(1), the apex court considered the purpose of sale in section 2(g) of the Central Sales Tax Act and held that it is not necessary that the goods be ascertainable. There could be....
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....ourt laid down the requirement of inter-State sale to be a movement of goods from one State to another. It must be a case of cause and effect; cause being the sale/ purchase and the effect being the movement of goods to another State. To fall under section 3(a) of the Central Sales Tax Act, the sale and the movement of goods must be parts of the same transaction. "A sale which occasions the movement of goods from one State to another is a sale, in the course of the inter-State trade, no matter in which State the property in the goods passes." Even if the goods move in pursuance of an agreement of sale and the sale is completed in the State in which the goods are received, it will be an inter-State sale. Further, it is immaterial whether a completed sale precedes the movement of goods or follows the movement of goods, or for that matter, takes place while the goods are in transit. What is important is that the movement of goods and the sale must be inseparably connected. The question whether a sale/purchase is an interState transaction depends on the facts of each case. The principles are well-settled; it is only a question of application of these principles to the facts found in e....
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....ue in the said decision. It is contemplated in the agreement itself which was entered into between the parties that the security deposit of 25 per cent of the full purchase price was to be furnished in case the tenderer wants to purchase for the purpose of export outside India. Besides that there were transit passes which were issued, income-tax form was also issued under section 206C of the Income-tax Act and the challan was also prepared. However, what tilted the balance on facts in the said case is the existence of the aforesaid agreement which envisaged the inter-State sale as provided in clause 3.13. The apex court has reiterated the law that in order to decide whether the sale is inter-State, it is sufficient that the movement of goods could have been occasioned by sale or should be incidental thereto. What is important that the movement of goods and sale must be inseparably connected. The emphasis of their Lordships is that the factum of movement of goods must be inseparably connected with sale. It has also been laid down that it is not necessary that there should be an existence of contract of sale incorporating the express or implied provisions regarding movement of goods.....
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....the period ending June 30, 2006 at the rate specified. The purchaser shall take delivery of cut and collected bamboos. The purchaser is required to furnish bank guarantee for the amount equivalent to 10 per cent of the total purchase price of the notified quantity of bamboos as per clause 9(i) of the tender notice from any nationalised bank as security in the prescribed form which will be issued by the bank in favour of concerned RGM for the due performance and observance of the agreement. Bank guarantee should be for a period up to October 31, 2006. Remaining amount is to be paid in instalments within 120 days. It was also a stipulation that in addition to the purchase price, the purchaser shall pay the commercial tax, forest development cess and any other tax at the time when purchase price is being paid. Following is the stipulation in clause 6(v) of the purchase agreement (P5): "6(v) In addition to the purchase price payable by the purchaser, vanijyik kar, forest development cess and any other tax shall be paid by the purchaser along with the purchase price at the time when the purchase price is being paid." Clause 6(vi) provides that the amount or the payment of purchase pri....
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....and with respect to the bamboos. We find certain orders have been placed on record by some of the petitioners/exporters of Madhya Pradesh which were, obtained by them from outside the State of Madhya Pradesh but they are also running their business in the State of Madhya Pradesh. What is of utmost significance whether the movement of tendupatta has taken place pursuant to the transaction in question or one incidental thereto or formed inseparable part. Our answer is in negative. Merely by issuance of transit passes to the purchasers, in our opinion, it would not be a case of inter-State sale. The purchase agreement (P5) contained in Schedule IV in the case of sale of tendu leaves provides the detail, method of sale, delivery. It is nowhere contemplated that the goods were to move from outside the State of Madhya Pradesh expressly or impliedly nor it was incidental thereto. In our opinion, the sale of tendupatta is not inseparably connected with the movement. There is no relationship in cause of sale and effect of movement. Merely by the fact that the exporter licence is held by some of the dealers is not enough to make it a case of inter-State sale on the settled principles of law....