2024 (4) TMI 813

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... (b) The petitioner has manufacturing units at Gudur in Andhra Pradesh and Ponneri and Athipetti in Tamilnadu. Those units manufacture rubber sheets and adhesives which are standard and also rubber sheets manufactured in accordance with the specification of a particular customer. Standard rubber sheets normally of 4 varieties of rubber sheets and adhesives which could be employed for different types of applications. These standard rubber sheets and adhesives on manufacture are stock transferred in a routine manner from Gudur to various branches as per the schedule provided by the Head Office (HO) at Chennai which in turn will send to various branches as per their requirement. The whole operation simply stating is thus: (i) The petitioner's branches outside A.P. secure order for pulley lagging with rubber sheets and adhesives for jointing the conveyor belts (ii) The contracts for work are communicated by respective branches to corporate office at Chennai. (iii) The corporate office at Chennai in turn would place orders on Gudur factory for manufacturing of rubber sheets and adhesives as per specifications. (iv) The manufactured rubber sheets a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....sive stocks transferred were standard goods which could be used/employed in the execution of all rate contracts and not made in terms of specifications provided by a particular customer and the property which was made a stock transfer continued to the property of assessee till it is used by the clients. Thus the petitioner requested to drop the proposed revision. However, despite the detailed objections of the petitioner, the 2nd respondent proceeded to confirm the proposal for revision and marked a re-assessment by deserving the claim under Section 6A of the Act and passed the impugned order dated 24.05.2006. Hence the Writ Petition. 3. 2nd respondent filed counter and inter alia contended thus: (a) The petitioner is a manufacturer of rubber sheets and adhesives with its HO at Chennai and manufacturing unit at Gudur. Petitioner got branches in some parts of the Country. (b) The petitioner is specialized in rubber lagging i.e., fixing the rubber sheets on pulleys and conveyor belts. The Assessment of the petitioner for the year 2000-01 was completed by the 1st respondent on 28.02.2002 under the CST Act, 1956. (c) The 2nd respondent being the revi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t in different States and the rubber sheets and adhesives manufactured at Gudur are being made as stock transfer covered by Form-F and there is no involvement of inter-state sales between the manufacturing unit at Gudur and the customers located in different States and the stock was transferred from manufacturing unit at Gudur to respective branches who in turn use the rubber sheets in their lagging contract works. The petitioner raises invoices for the material supplied to its branches since goods manufactured cannot be cleared from the factory without invoice and payment of central excise duty. Secondly, on point of law it is argued that Sub Section 3 of Section 6A of CST Act, 1956 which confers the power of re-assessment by the Assessing Authority on the ground of discovery of new facts or the revision by a higher authority on the ground that findings of the assessing authority are contrary to law was introduced for the first time by Finance Act No. 14/2010 w.e.f., 01.04.2010. The said provision being prospective in operation cannot be make applicable in the instant case as Assessment was completed by the 1st respondent way back on 28.02.2002 itself. Therefore, the impugned revi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s. The branches procure the purchase orders from different customer companies for rubber sheets with specific dimensions and submit to the HO. In turn the HO issues works order to the petitioner and the petitioner's manufacturing unit at Gudur manufactures the rubber sheets for required dimensions and dispatches the same directly to the branches by raising invoice for the material supplied by indicating the purchase order number and the date. The contention of the petitioner is that the branches at the different places enter into an annual rate contract for various items of work and the rate per unit as per the contract is indivisible including the cost of the material and the contract will be for a period of one year. The rubber sheets stock transferred by the assesse are standard sheets which can be used in common for all the rate contracts obtained by all branches from all the clients in the nearby locality and so these stocks manufactured are not custom made. The stock till arranged on to the pulleys of the customer continues to be the property of the assessee. Therefore, the movement of the manufactured rubber sheets and adhesives to the branches can only be regarded as stock ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... be submitted to the HO which in turn place the order on the manufacturing unit at Gudur for manufacture of the rubber sheets and adhesives and makes a stock transfer to various branches. Later, the branches will use those rubber sheets and adhesives during the course of execution of works contract. The costs of execution of work contract and rubber sheets are inseparable and included in the rate contract and therefore, the movement of goods from manufacturing unit at Gudur to different branches shall be regarded only as a stock transfer and liable to be exempted from tax under Section 6A of CST Act. On the other hand, the contention of the respondents is that the rubber sheets manufactured are of specific type and design to suit the requirement of the different customers but they are not of standard dimension intended to be supplied to the branches for general sale and in that view, and as the invoices are raised by the manufacturing unit on the individual customers before dispatch of the manufacture goods to the branches, the entire transaction shall be viewed only as inter-state sales in terms of Section 3(a) of CST Act. 12. On perusal of the impugned order, we find force in ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he branch office outside the State for delivery of the goods to the buyer. 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 juridical personalities. The question really is whether the movement of the goods from the registered office at Hyderabad is occasioned by the order placed by the buyer or is an incident of the contract. If it is so, as it appears no doubt to us, its movement from the very beginning from Hyderabad all the way until delivery is received by the buyer is an inter-State movement. In English Electric Co. of India Ltd. v. The Deputy Commercial Tax Officer and Ors. MANU/SC/0393/1976 : [1977] 1 SCR 631 this Court held that when the movement of the goods from one State to another is an incident of the contract it is a sale in the course of inter-State sale, and it does not matter which is the State in which property in the goods passes. What is decisive is ....