State Taxation Tribunal - Tamil Nadu
Sun Paper Mill Ltd. vs State Of Tamil Nadu on 28 March, 2003
Equivalent citations: [2004]136STC382(TRIBUNAL)
ORDER
S. Thangaraj, J. (Chairman)
1. This tax appeal was filed against the order passed by the Joint Commissioner (C.T.) (SMR), Chepauk, Chennai 5 in Ref. No. F1/16607/96 in SMR No. 356/96 dated May 25, 1998.
2. Learned Joint Commissioner (CT) (SMR), Chennai 5 in suo motu revision, issued a notice against the order passed by the Appellate Assistant Commissioner (CT), Tirunelveli in A.P. No. 345/95 dated August 16, 1995. The appellant appeared before the Joint Commissioner and resisted the notice issued by the said authority. The Joint Commissioner, in his order, has stated that the Kerala dealer who purchased the newsprint from the appellant and consigned the same for printing as news magazines and the resultant news magazines were said to be despatched to Kerala by Sivakasi printers. After the printing what moved out of the State were only news magazines and not newsprint with which the assessee is concerned, and inasmuch as the sale would fall under the purview of the Tamil Nadu General Sales Tax Act, 1959, the order of the Appellate Assistant Commissioner is liable to be set aside. On that ground, the learned Joint Commissioner (CT) (SMR) has set aside the order of the Appellate Assistant Commissioner and passed the impugned order.
3. Learned counsel for the appellant--Thiru K.J. Chandran has contended that what is transported is immaterial. As the newsprint purchased by the Kerala dealer from the assessee has been transported to Kerala, it is an inter-State sale.
4. Per contra, learned Senior Standing Counsel for the Revenue has contended that the newsprint purchased by the Kerala dealer from the assessee was not transported to Kerala and on the contrary, they were sent to Sivakasi for printing and thereafter news magazines were transported to Kerala. When once the newsprint was sent to Sivakasi and news magazines were printed therein, it is exigible to tax under the Tamil Nadu General Sales Tax Act, 1959.
5. On hearing the arguments of both sides, we have perused the records. Section 3(a) of the Central Sales Tax Act, 1956 says :
"3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.--A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase,--
(a) occasions the movement of goods from one State to another."
The said Sub-section (a) to Section 3 gives importance to the sale or purchase which occasions the movement of goods from one State to another. What has taken place in the present sale was a movement of goods from Tamil Nadu to Kerala. The intervening circumstance of converting the newsprint as news magazines will not attract Section 3(a) of the Central Sales Tax Act, 1956. To substantiate this contention, we are bound to cite three decisions. In Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457, their Lordships of the Supreme Court have held :
"A sale can be an inter-State sale, even if the contract of sale does not itself provide for the movement of goods from one State to another but such movement is the result of a covenant in the contract of sale or is an incident of that contract."
In the instant case, the contract of sale was for transport of newsprint from the factory of the assessee to the dealer in Kerala and finally, the newsprint converted into news magazine was delivered to the purchaser at Kerala. What has happened in-between at Sivakasi is immaterial since the transaction clearly falls under Section 3(a) of the Central Sales Tax Act, 1956.
6. Their Lordships of the Kerala High Court, in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Sundaram Industries Ltd. [1988] 68 STC 235 have taken a similar view. In that case, the Kerala State Road Transport Corporation entered into a contract with the assessee-Sundaram Industries Ltd., to construct body on the chassis supplied by K.S.R.T.C. Accordingly, after construction of body, the goods were despatched from Madurai to Trivandrum, as per the specific order placed by Kerala State Road Transport Corporation. Their Lordships of the Kerala High Court have held that it was an inter-State trade and the turnover in respect of those transactions could not be brought to tax under the Kerala General Sales Tax Act, 1963. The facts of this case are similar to that of the instant case.
7. Their Lordships of the Supreme Court in Co-operative Sugars (Chittur) Ltd. v. State of Tamil Nadu [1993] 90 STC 1, at page 5 have held :
"The appellant was permitted to purchase sugarcane in Coimbatore and Pollachi taluks only with a view to and exclusively for the purpose of transporting to its factory in Kerala. Whatever was purchased was transported to the appellant's factory in Kerala. It must, therefore, be held that this is a case where the movement of goods was occasioned by sale by the farmers or by the purchase by the appellant, whichever way one looks at it. The movement of the sugarcane from Tamil Nadu to Kerala is the incident of, and is inextricably connected with the sale/purchase. The purchase and transport are but parts of one transaction. They cannot be dissociated in this case. There is no break between the purchase and the movement of the goods to another State, viz., Kerala. It is immaterial, in such a case whether the sale/purchase takes place within Tamil Nadu or within Kerala. So long as the movement of goods is an incident of the sale/purchase it amounts to an inter-State sale/purchase. It is not also necessary that the contract of sale must expressly provide for movement of goods. It is sufficient if the movement of goods is implicit in the sale."
All these transactions fall within the ambit of Section 3(a) of the Central Sales Tax Act, 1956 and they are inter-State sales, which do not attract the provisions of the Tamil Nadu General Sales Tax Act, 1959 or the Kerala General Sales Tax Act, 1963.
8. Learned Appellate Assistant Commissioner, in his order, has cited a catena of decisions to come to a similar conclusion and the learned Joint Commissioner (CT) (SMR), Chennai, on wrong presumptions, treated the said sale exigible to tax under the Tamil Nadu General Sales Tax Act, 1959. We are unable to agree with the view taken by the learned Joint Commissioner (CT) (SMR), Chennai 5 and the appeal is allowed accordingly.
In the result, T.C. (A) 141 of 1999 is allowed.
And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
Issued under my hand and the seal of this Tribunal on the 28th day of March, 2003.