Madras High Court
M/S.Mrf Limited vs The State Of Tamil Nadu on 13 August, 2012
Author: Chitra Venkataraman
Bench: Chitra Venkataraman, K.Ravichandrabaabu
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.08.2012 CORAM: THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN and THE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU Tax Case (Appeal) Nos.2115 of 2006, 1717 of 2008 and 2212 of 2008 M/s.MRF Limited No.124, Greams Road Chennai-600 006 .. Appellant in all these TCs. versus The State of Tamil Nadu represented by its Assistant Commissioner (CT) Central Assessment Circle-II PAPJM Buildings, III Floor Chennai-600 006. .. Respondent in all these T.Cs. ----- PRAYER: Tax Case Appeal Nos.2115 of 2006, 1717 of 2008 and 2212 of 2008 are filed under Section 260A of the Income Tax Act, 1961 against the common order of the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench, Chennai-600 104, dated 6.12.2000 in T.A.Nos.151/99, 152/99 and 433/99. ----- For appellant in all these appeals : Mr.N.Sriprakash For respondent in all these appeals : Mr.R.Sivaraman Special Govt. Pleader (Taxes) ----- JUDGMENT
(Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) The assessee is on revision as against the order of the Tamil Nadu Sales Tax Appellate Tribunal relating to the assessment years 1989-90 and 1990-91.
2. The assessee is a company manufacturing tyres and tubes and is also a dealer. It is seen from the facts herein that the place of business of the assessee was inspected by the Enforcement Wing Officers on 28.12.1989. The various factories and branches were also inspected on the same day. During the course of inspection and verification of records, it was found that the dealers had not paid tax on the last purchase of rubber effected from State Trading Corporation of India Ltd., Madras. However, sales had been disclosed as inter-State sales by State Trading Corporation of India Ltd. and offered for assessment under the Central Sales Tax Act in the assessment of State Trading Corporation of India Ltd. and assessed at concessional rate of 4%, as the sales were covered by Form C.
3. The Assessing Officer pointed out that though the purchases were made locally, by manipulating certain records, treating it to be an inter-State transaction, State Trading Corporation of India (hereinafter referred to as "STC") started paying tax at 4%. On going through the application of allotment of raw rubber by STC and on the allegation made, the Assessing Officer came to the conclusion that the transaction in question was, pure and simple, a local transaction, assessable under the Tamil Nadu General Sales Tax Act. The payment of sales tax at 4% on the 'C' Form produced, did not alter the character of the transaction. He further pointed out that on receipt of the allocation order, the Manager Purchases (Import) of the assessee company, addressed STC, enclosing the Demand Draft towards the value of the consignment allotted, requesting STC to issue delivery order, mentioning the place of despatch. On receipt of the intimation, STC issued delivery orders to the assessee to take delivery of the raw rubber from STC's warehouses at Madras. From the above, the Assessing Officer came to the conclusion that transaction could not be treated as inter-State sale. The assessee resisted the proposal and submitted that it purchased natural rubber locally as well as through STC and that pursuant to the allotment order, there had been movement of goods from Chennai to Kottayam and Goa. The assessment had already been made on STC under the Central Sales Tax Act. Consequently, the question of a change in the character of the transaction as a local sale did not arise. In this connection, the assessee placed reliance on the decision reported in [1993] 90 STC 1 (SC) (Co-operative Sugars (Chittur) Ltd. Vs. State of Tamil Nadu) and [1971] 27 STC 127 (SC) (Tata Engineering and Locomotive Co. Ltd. Vs. State of Bihar) and contended that the title to the goods passed on to the assessee - MRF Limited only on delivery outside the State and consequently, the assessment could not be made under the Tamil Nadu General Sales Tax Act. The Assessing Officer rejected the contention of the assessee and confirmed the assessment. Aggrieved by this, the assessee went before the Appellate Assistant Commissioner, who confirmed the order of the Assessing Officer. The first appellate authority pointed out that a perusal of the purchase order showed the name of the applicant as that of the assessee and it had given the location of various factories. The Appellate Authority pointed out that a consolidated order was made on the basis of the requirements of the assessee company. Therefore, the offer could not be contemplated as indicating inter-State movement of rubber.
4. As regards the allocation order, the first appellate authority pointed out to the remittance slips, which reads as under:
" If remittance is on behalf of an allottee, who is different please give full details of allottees name and address to whom the amount is to be credited in our books".
5. Referring to the remitter's name against Kottayam and Goa, the first appellate Authority pointed out that when the purchase and allocation order had not contemplated inter-State movement, the remittance slips indicating the name of the remitter, per se, would not make the movement, an inter-State movement. In the absence of any material to show that the allocation was with reference to Kottayam, Kerala and Goa, the movement could not be held as one in pursuance of the contract of sale. Thus the First Appellate Authority confirmed the order of assessment.
6. Aggrieved by this, the assessee went on appeal before the Tamil Nadu Sales Tax Appellate Tribunal. It is a matter of record that at the time of passing the assessment order in respect of the assessment year 1989-90 dated 31.03.1991, the Assessing Officer imposed tax on the differential rate at 1%, keeping in mind the tax already levied at the hands of STC charged at 4%. The assessment levying 1% tax was however sought to be revised by order dated 02.08.1996, to levy tax at 5%. Thus the assessee once again went on appeal before the various forums. The Tribunal confirmed the order of assessment as well as the First Appellate Authority's order. Thus as against the order of the Tribunal in respect of the assessment year 1989-90, T.C.No.1717 of 2008 is now before us. So too, as against the order dated 02.08.1996, which went on appeal before the Tribunal, T.C.No.2115 of 2006 has been filed. Apart from these two years, there is yet another assessment, which was the subject matter of appeal before the Authorities below, now before us in T.C.No.2212 of 2008. The assessment made relates to the assessment year 1991-92. Except for a mere variation in facts that the allotment order in respect of the assessee underwent a change to include Kottayam as a separate account, the facts are identical as relating to the assessment year 1989-90. STC was assessed on the turnover under the Central Sales Tax Act. The assessee also stated that the assessments at the hands of STC as inter-State sales remained unchallenged. The Tribunal ultimately rejected the contention of the assessee.
7. A perusal of the order of the Tribunal shows that considering the character of the sale, the description under Entry 126 was not a relevant consideration. The question before the Tribunal was as to whether the transaction in question was an inter-State sale or a local sale, taxable at 5% at the hands of the assessee herein as a last purchaser. Referring to the application as well as the allotment order, the Tribunal pointed out that there is a definite condition in the allotment order that natural rubber allotted to an allottee would be used in their own Unit and would not be sold or permitted to be utilized by any other party or Unit. On the allotment, the assessee made the payment stipulated therein, the price being ex-godown. After payment, the allottee should lift the goods within 9 days from the date of payment. Thus, in the background of these facts, the Tribunal pointed out that after the said order was issued, the assessee herein took delivery of the natural rubber from the Central Warehousing Corporation at Virugambakkam and arranged their own lorry to transport the rubber to Kerala through Kerala Transport Corporation, as well as to Goa.
8. Referring to the decisions of the Apex Court on the character of inter-State sale, the Tribunal held that there could be no inter-State sales, unless there was a movement of goods from one State to another and the inter-State movement must be the result of the incidence of the contract of sale. In other words, to be an inter-State sale, the movement of goods from one State to another State must be an integral part of the sale.
9. Applying the said principle, the Tribunal held that the issuance of allocation order showed that the contract of sale got concluded from the delivery of raw rubber to the transporter by the appellant as per the terms and conditions of allotment. The Tribunal pointed out that there was no clause in the allocation order or any subsequent agreement specifying that the delivery instruction to despatch the goods to Kottayam or Goa, was an incidence of sale. Referring to the reliance placed on the remittance slips and the delivery order mentioning MRF Limited as the consignee, the Tribunal held that the lorry receipt could not be given any weightage, to accept the claim of the assessee that it was only an inter-State sale. The Tribunal held that after taking delivery of the goods, the assessee had transported the goods from ex-godown at Virugambakkam to its Branch Office at Kerala and Goa through Kerala Transport Company. Considering the fact that the assessee had not obtained any allotment order or allocation order speaking about specific allotment, the claim of the assessee could not be sustained. As regards the furnishing of 'C' Forms, the Tribunal pointed out that when the purchases were made by the assessee as one Unit, the branches and factories being the limbs of the assessee, the mere furnishing of 'C' Forms would not alter the character of the transaction from an intra-State sale to an inter-State sale. On facts, the Tribunal found that there was no obligation on the part of STC to move the goods from Tamil Nadu to Kerala or Goa. The concern of STC was that the goods were to be lifted from its Ex-godown within the time frame and thereupon, the responsibility of STC ceased. There was no obligation cast on STC to move the goods in pursuance of the contract, either implied or express. In the absence of any specific arrangement between the assessee and STC, as the movement was made by the assessee after taking delivery, the transaction could not be assessed as an inter-State sale under the Central Sales Tax Act. The Tribunal observed that there was no specific link to make the movement as one connected with the contract of sale. The subsequent movement of rubber was an independent transaction and not connected with this transaction. The Tribunal, thus, came to the conclusion that after taking delivery, the assessee had distributed various quantities to its branches, which would not make the movement, an inter-State one, to fall under Section 3(a) of the Central Sales Tax Act. Thus the Tribunal rejected the assessee's contention.
10. As far as the assessment year 1991-92 is concerned, the Tribunal pointed out that the allocation order dated 16.08.1991 had an insertion to include the Unit at Kottayam therein. Under what circumstances this insertion in ink had been made, was not explained by the assessee. In the circumstances, the Tribunal rejected the contention of the assessee that the facts in respect of the assessment year 1991-92 were different from that of 1989-90. Thus, on the reasons which were given in respect of 1989-90, the assessment in respect of 1991-92 also stood confirmed. Aggrieved by this, Tax Case Revision No.2212 of 2008 has been filed by the assessee.
11. Learned counsel appearing for the assessee took us extensively through the application made by the assessee as well as the allocation order made. He pointed out that considering the various clauses in the allocation order as well as the application, it was clear that at every stage, STC reserved the right to cancel/modify the application/allocation. Therefore, the allotment order made by STC could not be treated as having resulted in a binding contract between the parties. The contract fructified only when the deliveries were effected. Prior to that, there was no concluded contract. Thus, at the time when the deliveries were effected, the contract stood concluded and on the delivery, the understanding between the parties was that there was to be movement of goods to outside the State. This is evident from the remittance made by the respective Branches for which goods were to be lifted by the assessee. In the light of the said facts, particularly the remittance subject to the delivery order, the inexplicable conclusion is that the movement was only an incidence of sale and not a post-sale direction. He further pointed out that unless there was an appropriation of goods from out of the huge lot of imported raw rubber, the sale could not be said to have taken place. In the facts of the case, only when delivery was effected for the particular quantity, there was an appropriation of the goods under the contract for the particular Unit of the assessee, which resulted in the movement of goods from this State to outside the State. Movement and delivery were inseparably connected, to satisfy the conditions under Section 3(a) and rightly, the assessment was made by STC under the Central Sales Tax Act. He further pointed out that the assessment made on STC under the Central Sales Tax Act had become final and the Department had collected 4% tax based on the 'C' Form furnished by the assessee. Placing reliance on the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)) and [2007] 7 VST 214 (State of Orissa Vs. K.B.Saha & Sons Industries Pvt. Ltd.), learned counsel submitted that the Apex Court decisions directly covered the case on hand in petitioner's favour. Thus, pointing out to the assessment at the hands of STC under the Central Sales Tax Act, the question of treating the self same turnover as escaping further assessment at the hands of the assessee under the Tamil Nadu General Sales Tax Act as last purchaser did not arise. He submitted that the State had already decided the character of the transaction and there are no further material at the hands of the Revenue to change its view on the character of the transaction. Learned counsel further pointed out that in the event of this Court not accepting the case of the assessee, considering the fact that tax at 4% had already been collected by STC from the assessee and had remitted it to the State, the differential tax herein being only 1%, directions be issued to the State to restrict its claim to 1% alone. In this connection, he placed reliance on the decision of this Court reported in [1990] 77 STC 162 (Trichur Cotton Mills Limited Vs. State of Tamil Nadu), which, in turn, had followed the decision reported in [1988] 71 STC 202 (State of Karnataka Vs. Ayyanahalli Bakappa & Sons). Apart from the submission made as regards the assessment year 1989-90, learned counsel also pointed out that as far the assessment year 1991-92 is concerned, after the allotment order dated 16.08.1991, the assessee addressed a letter on 21.08.1991, which reads as under:
" August 21, 1991 The Deputy Marketing Manager The State Trading Corpn. of India Ltd. Jawahar Vyagar Bhavan Tolstoy Marg New Delhi-110 001. Dear Sir
We thank you for your Allocation Order No.STC/NR/103009 dt. 18.8.1991 for the following 3 grades of Natural Rubber for the quantities indicated against each:
RSS-3 .. 268 MT SMR-20 .. 803 MT RMA-5 .. 214 MT We intend lifting the above quantities for our Units as under:
RSS-3 .. KOTTAYAM UNIT SMR-20 .. MADRAS UNIT RMA-5 .. KOTTAYAM UNIT We request you to kindly endorse this letter or alternatively the Allocation Order copy sent herewith so that the same can be submitted to STC Madras for their acceptance of respective 'C' Forms. Kindly treat this matter as urgent.
A similar action was taken by your office last year.
Thanking you Yours faithfully, for MRF Limited Sd/- xxxxxxx MANAGER PURCHASE IMPORTS "
Thereupon, STC (Rubber Division) passed an order on 16.08.1991 by including the name of Kottayam Unit in RSS-3. Thus, contrary to the findings of the Tribunal, this document clearly proved that the allocation order clearly spelt out as to what was to be sent to Kottayam Unit. Thus the allocation order speaking on the sale thus carrying the destination as Kottayam, the movement had to be necessarily treated as an incidence of sale; consequently, the order of the Tribunal has to be set aside.
12. Per contra, learned Special Government Pleader appearing for the Revenue, pointed out to the circumstances under which the assessment had been made at the hands of the assessee. Supporting the order of the Tribunal confirming the order of assessments, as far as the assessment for the assessment year 1991-92 is concerned, he submitted that the letter written by the assessee on the allocation, however, is to be viewed only as a direction and that the movement of goods cannot be treated as a condition attached to the sale. As is evident from the letter dated 21.08.1991, the inescapable inference that one would draw is that the sale is only to MRF Limited, Chennai, and that the insertion of the name of Kottayam Unit is only for assessees' delivery purpose, which is not the same as a causal effect that one finds in an inter-State sale; consequently, no exception could be taken to the order of the Tribunal.
13. Heard learned counsel appearing for either side and perused the material placed on record.
14. As far as the contention of the assessee regarding the character of the transaction is concerned, we do not find any justifiable ground to accept the case of the assessee to treat the sale as an inter-State sale. In the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)), the Apex Court considered the law laid down by the Apex Court in the decisions reported in [1976] 37 STC 207 (Balabhagas Hulaschand Vs. State of Orissa) and [1979] 43 STC 457 (SC) (Union of India Vs. K.G.Khosla and Co. Ltd.) and pointed out that to be called an inter-State sale or purchase, it is not necessary that the contract of sale must expressly provide for and/or stipulate the movement of goods from one State to the other; it is enough if such movement of goods is implicit in the contract of sale. Where the movement of goods is neither expressly provided for in the contract nor implicit in it, the movement of goods from one State to another cannot be related to sale/purchase. Therefore, to fall under Section 3(a), sale and the movement of goods must be part of the same transaction.
15. As far as the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)) on which heavy reliance was placed by the assessee is concerned, the assessee therein purchased goods from cartmen and agriculturists as commission agents on behalf of ex-UP principals and the goods purchased were duly despatched to such principals to places outside the U.P. State. The despatches took place not later than three days from the date of purchase and the railway wagons were available. On facts, the Apex Court held that the purchase of goods and their despatch were part of the same transaction and the movement of goods from one State to another was occasioned by and was the result of or the incident of the purchases; hence, the transactions were assessable as inter-State trade and not as a local sale. In considering the question as to whether the assessment could be called as a local sale or an inter-State sale, the Apex Court pointed out that if the commission agent had purchased the goods on behalf of ex-U.P. principals in the first instance and thereafter, in pursuance of subsequent instructions, despatched the goods, the despatch instructions would be independent of the purchase instructions. Thus, there could be no live link between the purchase and despatch of goods. Consequently, the movement would have been totally unconnected with the purchase, that there could not have been an inter-State purchase. However, given the fact that the goods were purchased by the commission agent on behalf of UP principals, on despatch to such principals as per their direction, there being no break, the Apex Court held that the transaction could not be assessed as a local sale.
16. In the decision reported in [2007] 7 VST 214 (State of Orissa Vs. K.B.Saha & Sons Industries Pvt. Ltd.), once again, the Apex Court reiterated the well settled principle and held that when in the tender document, there was a clear indication that the principal place of business and the additional place of business were all outside the State of Orissa, it was clear that the sale was an inter-State sale. To come to the said conclusion, the Apex Court reiterated the principle laid down in the decisions reported in [1976] 37 STC 207 (Balabhagas Hulaschand Vs. State of Orissa), [1963] 14 STC 175 (SC) (Cement Marketing Co. of India Vs. State of Mysore), [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)) and [1966] 17 STC 473 (SC) (K.G.Khosla & Co. Vs. Deputy Commissioner of Commercial Taxes). Thus as a principle of law, there is no dispute between the parties herein. Hence, the only question that remains herein is whether the facts that are found, fit with the principles of law laid down under Section 3(a) of the Central Sales Tax Act, as interpreted by the Apex Court.
17. A perusal of the application made for allotment of rubber shows that the name of the applicant is given as MRF Limited. The application also mentions the factory/establishments at various places. Sl.No.7 gives the total requirement for six months in respect of various grades of natural rubber, totalling to 14234 MTs. It is relevant to point out herein that except for giving the requirement of various grades, there is no allocation sought for Unit-wise, thereby indicating the desire that the order was placed for the various branches, to result in an inter-State movement.
18. Learned counsel appearing for the assessee, however, pointed out that Clause No.12 of the application clearly indicated that the allocation would be made as per the Annexure. A perusal of the annexure herein, shows at Clause 4, a reference to furnishing 'C' form in the case of inter-State sale, that in the absence of a prescribed form, tax at 10% would be charged and collected under the Central Sales Tax Act. We do not think, Clause 4 would, in any manner, be helpful in deciding the character of the transactions in the case before us. A reading of the terms and conditions of allocation of natural rubber shows that they are general in character, that wherever there is a movement of rubber, as an incidence of sale, certainly, as per the clause, Central Sales Tax provisions would stand attracted. Therefore, the inclusion of a clause as referring to furnishing of 'C' Forms as regards inter-State sale in the general conditions, per se, would not, in any manner, pronounce on the character of the transaction that we have to deal with herein.
19. Clause 5 of the General conditions refer to "Delivery" which states that the goods would be delivered to the allottees or their authorised representatives against valid letter of authorisation, permitting the representative to receive the goods on their behalf. The said clause further states that the deliveries effected to the representatives would constitute delivery and discharge of obligation on behalf of STC. It also states that the allottees were free to examine the goods in respect of quality and weight before taking delivery at STC's godowns. The said clause reserves the right to STC to supply rubber much less than what had been allotted and also have the right to cancel the allocation or suspend the delivery in part or in full. Even though learned counsel submitted that such a clause would indicate uncertainty as a concluded contract, we do not think, this would, in any manner, make the contract of a doubtful character. We reject the line of reasoning of the assessee that the delivery alone would make the contract a confirmed contract. The fact that STC has reserved the right to alter or cancel the allotment, however, does not touch on what the parties contemplated as regards the movement of goods. There is nothing on record to show that the parties intended on the facts of the case that allotment was intended to result in movement of goods to various branches of the assessee.
20. It is seen from the document dated 25.08.1989 that the allocation order was issued by STC to MRF Limited, 826, Anna Salai, Madras, for 342 Metric Tonnes of natural rubber of Grade RSS-III at Rs.25,000/- per Metric Tonne ex-godown. Thereupon, on 06.09.1989, in respect of what had been lifted, there is a remittance slip, particularly with reference to the lifting of rubber for Kottayam and Goa. In clause b, there is a specific reference that if remittance was on behalf of an allottee who is different, full details of allottee's name and address to whom the amount was to be credited in their books, had to be furnished.
21. It is not the case of the assessee herein that the Units at Kottayam and Goa are part of the assessee's concern. Being part of the very same establishment, the mere payment by the Units for any administrative convenience, per se, would determine the character of the transaction. On the other hand, a reading of the allotment order in the context of the application made by the assessee shows that it was a consolidated order in respect of all its Units. Contrary to the assertion of the assessee that the said order contemplated the movement from one State to another, one can only say that the assessee had made use of the particular delivery for the purpose of satisfying the requirement of its Units outside the State. The fact that STC issued a bill in the name of MRF Limited, Kottayam, or for that matter, a certificate had been issued by STC that MRF Limited, Kottayam and Goa had purchased natural rubber from STC, however, would not, in any manner, make the transaction an inter-State sales; that the authorities rightly came to the conclusion that the movement had nothing to do with the transaction of sale. The application of the delivered raw rubber to any particular Unit outside the State is a matter of choice and the discretion of the assessee and the seller, at no point of time, was involved in this. On a reading of the facts herein, we have no hesitation in holding that what had been observed by the Apex Court in the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)) at page 204, would fit in with the facts of the case, that after having purchased the goods, the assessee had issued despatch instructions for movement of the goods to the other State. Thus when there is no link between the purchase and despatch, it is difficult to accept the case of the assessee that the movement is nothing but an inter-State sale. In the light of the above, the decision reported in [1992] 87 STC 196 (Commissioner of Sales Tax Vs. B.L.Kailash Chand Arhti (S.C.)), in fact, advances the case of the Revenue that it is only a local sale, assessable under the Tamil Nadu General Sales Tax Act.
22. As far as the contention of the assessee that the assessment made under the Central Sales Tax Act to STC on the self-same turnover would estop the Revenue from making assessment on the assessee concern, we do not think, such a claim would, in any manner, assist the assessee. As already seen, in the Assessing Authority's judgment, the transaction's nature came to light based on the materials seized at the time of inspection made on 28.12.1989. The fact that STC had offered the turnover under the Central Sales Tax Act and the same was also assessed so, cannot tie the hands of the Assessing Officer to enquire further, to arrive at the correct inference as to the nature of the transaction and pass orders under the correct provision of the relevant Act, that the purchases made locally and the delivery instruction given subsequently were only local sales. The fact that STC had offered the turnover for assessment, hence, cannot, in any manner, foreclose an enquiry into the character of the transaction, which merited to be considered on the basis of the documents seized at the time of search. Consequently, we do not find any good ground to accept the plea of the assessee that the assessment made already on STC under the Central Sales Tax Act enactment, would stand in the way of the Assessing Officer considering the said turnover once again at the hands of the assessee for assessment under the Tamil Nadu General Sales Tax Act. Going by the principles laid down by the Apex Court, we find no reason to differ from the finding of the authorities to consider the transaction as a local sale to be assessed under the provisions of the Tamil Nadu General Sales Tax Act.
23. As far as the reliance placed on the decision reported in [1990] 77 STC 162 (Trichur Cotton Mills Limited Vs. State of Tamil Nadu) is concerned, the same is similar to the case on hand. A reading of the said decision shows that the assessee therein is a dealer on cotton yarn and spinning materials in the State of Kerala, having a sales depot in Tamil Nadu. The assessee purchased cotton in the State of Tamil Nadu, pressed the same into bales and thereafter transported them to its mills in the State of Kerala. The assessment made on the assessee was reopened to levy tax on the assessee's turnover on the purchase of cotton. The assessee took the plea that the seller from whom the assessee had purchased was the last purchaser and the transactions were inter-State sales, or in the alternative, that the purchase turnover of cotton having been subjected to tax at the last point of purchase in the State and the rate of tax also being the same, as cotton was an item of "declared goods", the very same turnover could not again be subjected to tax. On facts, this Court held that the assessee was the last purchaser in the State. However, taking note of the fact that the turnover had already been subjected to tax at the hands of the vendor and that the assessee had paid the tax to the vendor while purchasing the cotton and that when the commodity in question was "declared goods", the same could not again be subjected to tax.
24. As far as the present case is concerned, rubber was assessable under the First Schedule under Item No.74, taxable at 5%. It is not denied by the Revenue that the turnover which is now sought to be assessed at the hands of the assessee is already a subject matter of consideration at the hands of STC under the Central Sales Tax Act and tax had been collected at 4% by reason of the 'C' Form given by the assessee. Given the fact that, as per Entry 74 of the First Schedule, the same is assessable at 5%, there is a loss to the revenue to the extent of 1%. As held in the decision reported in [1990] 77 STC 162 (Trichur Cotton Mills Limited Vs. State of Tamil Nadu), herein too, it is not denied that STC had collected tax at 4% from the assessee and remitted it to the State. In the circumstances, even though the tax leviable on the assessee is 5% as a last purchaser, given the fact that the assessee had already paid 4% tax to STC and the same had been remitted to the State too, following the decision reported in [1990] 77 STC 162 (Trichur Cotton Mills Limited Vs. State of Tamil Nadu), in the interest of justice, this Court feels that the claim of the assessee merits consideration that on the assessment made, the Revenue should consider the adjustment of 4% tax remitted to the State by STC as one in compliance of the payment made by the assessee. Thus, holding that the transaction is assessable under the Tamil Nadu General Sales Tax Act, we direct the State to verify the above-said fact of payment by the assessee and the remittance by STC and then give necessary adjustment in respect of 4% tax paid by STC as the payment made in respect of the assessment made on the assessee as a last purchaser and that the balance of tax payable by the assessee would be only to an extent of 1%. In the circumstances, the Tax Cases filed for the Assessment Year 1989-90 viz., Tax Case Revision Nos.2115 of 2006 and 1717 of 2008 stand rejected, except for the above observation.
25. As far as the assessment year 1991-92 is concerned, as already pointed out, on the insertion of Kottayam in the allotment order issued subsequently, it is seen from the application form made by the assessee that the applications made in the earlier years are no different that it made a consolidated request before STC for the supply of raw rubber.
26. A perusal of the allocation order dated 16.08.1991 reads as under:
THE STATE TRADING CORP OF INDIA LTD (RUBBER DIVISION) Tele :3313177/Extn.2070 Telex : ND-65180/62103/65292 Cable: ESTICI Jawahar Vyapar Bhavan Tolstoy Marg New Delhi-110 001 ALLOCATION ORDER FOR NATURAL RUBBER Ref No : STC/NR/T/03 Date: 16.08.1991 Allocation Order No.STC/NR/103009 The State Trading Corp. The State Trading of India Ltd Corp.of India Ltd.
(Rubber Section Ajay Vihar, MG Road Chennai House P.O. Box.1813, 7-Esplanade Cochin-602 016. Madras-600 108. Dear Sir
We are pleased to allot Natural Rubber in favour of the following party as per details given below:-
Name of the allottee: M/s.MRF Limited.
Address : Madras. CURRENT RELEASE: RSS-3 SMR-20 RMA-5 Quantity (MT) 268 803 214 Unit Price (Rs./PMT) 27900/- 27900/-24514/- Ex-Godown (Madras) (Madras) (Kerala) (Sales Tax and other local levies extra at actuals) Validity for payment : Upto 31.08.1991 total Quantity Registered (MT) : Total Qty. previously released (MT) : (Excluding this release) Total Quantity released to date (MD):
In case the payment for above Allocation Order is not made by 31/8/1991 the unit price of Natural Rubber will get enhanced as under:-
- RSS-3 & SMR-20 grades: Rs.449/- per MT per month - RMA-5 : Rs.441/- -do-
The payment of RMA-5 is to be made first. STC-Madras will accept payment for RSS-3 & SMR-20 only after receipt of confirmation from STC-Cochin.
Yours faithfully, for The S.T.C. of India Limited, Sd/- xxx Deputy Marketing Manager.
Copy by Registered post to: M/s.MRF Limited 826, anna Salai Madras-600 002.
With the request that they may approach our Branch Offices for taking delivery of the material. the allocation is subject to terms & conditions for allocation of Natural Rubber and undertaking given by them alongwith the application form.
N.B. Lifting should be completed within 9 days from the date of payment.
RMA-5 should be lifted first. "
27. We find difference between the allocation order relating to 1989-90 and 1990-91 and there is a specific reference to what is allotted for Madras, Kerala and Goa. On 21.08.1991, the assessee wrote a letter to the Deputy Marketing Manager of the State Trading Corporation, which pointed out to the lifting of rubber and the quantity for their units, which we have already extracted in paragraph 11.
28. The letter requested the authorities to endorse the letter or alternatively, the Allocation Order copy, so that the same could be submitted to STC, Madras for their acceptance of the respective 'C' Forms. Accordingly, in the allocation order dated 16.08.1991, the name of Kottayam Unit was endorsed under RSS-3 as against Madras. The price assigned for RSS 3 and SMR 20 was shown at the unit price of Rs.27,900/- per Metric Tonne, and under RMA-5, at the unit price of Rs.24,514/- per Metric Tonne. Thus, on the allocation order already made, at the request of the assessee, the supply of RSS-3 was under the name of Kottayam Unit.
29. As is evident from the original allocation order, the price charged by STC for Chennai and Kottayam, Kerala are totally different. However, on the revised order, the price charged for RSS-3, now allotted to Kottayam, however, remained the same as for Chennai. As rightly contended by the learned Special Government Pleader, we can only construe the allocation order dated 16.08.1991 as carrying out the request of the assessee for delivery at Kottayam, which cannot be treated as the same as the assessee having originally entered it as RMA-5 - Kottayam. Thus the delivery instruction given cannot be construed as forming part of the sale transaction as indicated in the allocation order and as already noted in the preceding paragraph, on the request made, instead of making an endorsement in the letter itself, STC made necessary endorsement in the allocation order.
30. Thus, the mere endorsement in the allocation order dated 16.08.1991 making the allocation of RSS-3 from Madras to Kottayam at the price at which it was originally quoted for Madras, hence, will not improve the case of the assessee for treating the transaction as an inter-State sale.
31. As far as the order of the Tribunal at paragraph 49 is concerned, we do not find any basis for the Tribunal doubting the insertion. Going through the document placed before us, we have no hesitation in holding that the insertion is not doubtful in character and the insertion had arisen by reason of the requisition made by the letter dated 21.08.1991. As already pointed out, the insertion made in the allocation order makes no difference at all to the facts of the case herein. Consequently, the decision as in Tax Case Revision No.2115 of 2006 would equally apply to Tax Case Revision No.2212 of 2008 and the same stands dismissed.
In the result, except for the observation stated above, Tax Case Revision Nos.2115 of 2006 and 1717 of 2008 stand dismissed and Tax Case Revision No.2212 of 2008 also stands dismissed. Connected M.P.No.1 of 2008 in Tax Case Revision No.2212 of 2008 stands dismissed. No costs.
Index: Yes / No (C.V.,J.) (K.R.C.B.,J.)
Internet: Yes / No 13.08.2012
ksv
To
1. The Tamil Nadu Sales Tax Appellate Tribunal
(Main Bench), Chennai.
2. The Deputy Commissioner (CT) Appeals
Chennai.
3. The Assistant Commissioner (CT)
Central Assessment Circle II
Madras-600 006.
CHITRA VENKATARAMAN,J.
and
K.RAVICHANDRABAABU,U.
ksv
Tax Case (Appeal) Nos.2115
of 2006, 1717 of 2008 and
2212 of 2008
Dated: 13.08.2012