TaxTMI 
TaxTMI 
2023 (3) TMI 1004
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....irst Appellate Authority rejecting the claim of the petitioner that the transfer of goods from one unit of the petitioner company to another unit does not constitute sale. 2. Brief facts of the case are: (a) The petitioner is a company incorporated under the Companies Act, 1956. The petitioner had two Divisions in the State of Tamil Nadu, namely, Rajashree cement, a Cement unit and Hi Tech Carbon Unit producing carbon black. It is submitted that both the Divisions had obtained separate registration certificates under the Tamil Nadu General Sales Tax Act, 1959. Apart from the above two divisions, the company had seven other divisions across the country, in all, nine divisions across the country viz., (1) Rayon Division (2) Cement....
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....on. 3. To resolve the issue as to whether inter unit transfer of goods would constitute a sale, it would be relevant to refer to Section 2(n) of TNGST Act which reads as follows: "Section 2(n) "sale" with all its grammatical variations and cognate expressions means every transfer of the property in goods (other than by way of mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration and includes - (i) a transfer, otherwise than in pursuance of a contract, of property in any goods of cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) inv....
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....of tax may not be justified. 4. We find that the petitioner before us has furnished documents to show that Hi Tech Carbon Unit and Cement Unit, which were involved in stock transfer are nothing but different units of the petitioner company the 1st requirement of existence of two entities is thus absent and would submit as under in that regard:- (a) Hi Tech Carbon Unit as well as Cement Unit are different units of the petitioner company, namely, Indian Rayon and Industries Limited, which alone has been registered under the Companies Act, 1956. (b) The deferral agreement entered into between Hi Tech Carbon Unit III and the Government of Tamil Nadu wherein a reference is made to Hi Tech Carbon as being a unit of Indian Ray....
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....entities involved in a transaction, levy of tax by treating it as a transaction of sale is wholly impermissible. In this context, it would be relevant to refer to the following judgment of the Andhra Pradesh High Court in The K.C.P. Limited V. State of Andhra Pradesh reported in (1993) 88-STC-374 wherein it was held that mere registration certificate obtained by different branch or unit will not by itself result in different units becoming distinct and different legal entities capable of transferring properties/goods from one entity / person to another which is a sine qua non for a transaction to be treated as a sale attracting the charging provision. The relevant portion of the said judgment is extracted hereunder: "19. The regist....
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....ered office and the branch office do not possess separate juridical personalities. The relevant portion of the said judgment is extracted hereunder: ".......We must not forget that both the registered office and the branch office are offices of the same company, and what in effect does take place is that the company from its registered office in Hyderabad takes the goods to its branch office outside the State and arranges to deliver them to the buyer. The registered office and the branch office do not possess separate jurisdical personalities". 6. It is thus evident that unless and until there are two distinct entities, the question of sale may not arise. However, the Tribunal has not even addressed this issue and has misdirecte....