Madras High Court
Macneil And Magor Limited vs State Of Tamil Nadu on 7 July, 1992
JUDGMENT Bakthavatsalam, J.
1. In all these appeals preferred by the assessee for the three assessment years 1969-70, 1970-71 and 1971-72 the dispute relates to the respective yearly turnover of Rs. 3,52,391.18, 6,11,015.81 and 5,69,608.04.
2. The assessee is a dealer carrying on business in electrical goods and drawing materials. The disputed turnover was assessed as inter-State sale under the Central Sales Tax Act, 1956, by the assessing officer, after going through the material produced before him and taking into account the fact than no "C" forms were produced. On appeal, the first appellate authority allowed the claim holding the transaction as a stock transfer from head office to branches. By virtue of the suo motu power under section 34 of the Tamil Nadu General Sales Tax Act, 1959, the Joint Commissioner sought to revise the order of the three assessment years, after issuing notice and calling for objections from the assessee.
3. The Joint Commissioner found from the assessment records that the orders for supply of goods from branches speak of the customers with their name and address with the description of goods to be supplied to them. As such the Joint Commissioner came to the conclusion that the goods were despatched by the assessee at Madras in pursuance of the orders received through its branches earmarking the goods for the customers in other States, though the railway receipt or lorry receipt was sent to the branches which handed over the goods later to the customers in other States. On facts, the revisional authority, finding that the order of the first appellate authority is erroneous in law set it aside and restored the order of the assessing officer thus bringing to taxation the disputed turnover for the three assessment years as noted above, since no "C" forms were furnished by the assessee.
4. Learned counsel appearing for the appellant-assessee contends that the order of the first appellate authority has been wrongly reversed by the revisional authority. Learned counsel would contend that the transfer to other States is only a stock transfer from a head office to its branch office and it cannot be held to be an inter-State sale, as one coming under section 3(a) of the Central Sales Tax Act. Learned counsel further contends that the principles laid down in English Electric Company of India Ltd. v. Deputy Commercial Tax Officer and South India Viscose Ltd. v. State of Tamil Nadu may not apply to the facts of this case, as there is no direct link to the movement of goods, since the goods were not sent directly to the buyers in other States.
5. We are at a loss to appreciate the argument of the learned counsel for the appellant. A perusal of the files of the first appellate authority as well as the revisional authority would clearly show that the first appellate authority had not gone into the matter of rather not applied its mind before setting aside the assessment order. In our view, the files do not disclose any material to justify the conclusion arrived at by the first appellate authority, that is to hold that the transaction in question is a stock transfer and not an inter-State sale. It has been held by a Division Bench of this Court in Chesebrough Pond's Inc. v. State of Tamil Nadu [1983] 52 STC 164 when considering a case of a head office with branch at Bombay which placed orders and on the orders of the branch office the head office consigning goods by lorry with mention in lorry way-bill of orders placed by Canteen Stores Department, the Division Bench held that the Bombay branch supplying goods to Canteen Stores Department cannot be termed as stock transfers and it is liable to be taxed as inter-State sale. The Division Bench, after referring to the decision of the apex Court of the land in English Electric Company of India Ltd. v. Deputy Commercial Tax Officer has observed as follows :
"In the present case there is only one difference on the facts, which is not material to the application of the principle. The head office at Madras did not despatch the goods direct to the canteen stores department which placed the orders, but it sent the goods to the Bombay branch from where the goods ultimately found their way to the purchaser. We do not, however, think that this makes any difference to the application of section 3(a) of the Act. In our judgment, it does not matter how many stop overs there are in the delivery State before the goods reach the purchaser's hands. All that matters is that the movement of the goods is in pursuance of the contract of sale or as a necessary incident to the sale itself."
6. The apex Court of the land has held in Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301 that the question really is whether the movement of the goods from the registered office is occasioned by the order placed by the buyer or is an incident of the contract and if it is so, its movement from the very beginning from the registered office all the way until delivery is received by the buyer is an inter-State movement.
7. In view of the categorical decisions of the apex Court of the land in English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475, South India Viscose Ltd. v. State of Tamil Nadu [1981] 48 STC 232 and Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301, we have no hesitation to hold that the transaction which is the subject-matter in these appeals cannot be held to be as "stock transfer", but only as "inter-State sale" under section 3(a) of the Central Sales Tax Act. Accordingly the appeals fail and are dismissed. There will be no order as to costs.
8. Appeals dismissed.