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It is necessary to bear these principles in mind while examining the facts of the appeals before us to which we now turn.

P A R T = II Bharat Heavy Electricals Limited [BHEL] is a major public sector corporations wholly owned by the Government of India. It has its units in several places viz., Haridwars Jhansi, Bhopal, Bangalore, Ramachandrapuram [Andhra Pradesh

- near Hyderabad], Ranipet and Tiruchi [Tamil Nadu] and so off. Each of these units appears to specialise in the manufacture of particular type or class of machinery - in the interest of avoiding duplication and enhancing efficiency. Generally speaking, BHEL is engaged in the manufacture of heavy electrical machinery including equipment and material necessary for setting up power plants. Its dead Office is at New Delhi. It appears that whenever it undertakes to set up a power-generation plant, it enters into two contracts, one for the supply of machinery and equipment called "the Supply Contract" and he other for installation or erection of the plant called "Service Contract". Once the job is undertaken, the Head Office sends instructions to relevant units to manufacture the appropriate machinery. for illustrating its method of working, we may take a concrete instance,viz., the setting up of five captive power plants [120 MW each] for the aluminium smelter complex at Angul, Orissa for the National Aluminium Company Limited, Bhuvaneshwar [NALCO], which too is a public sector undertaking. The facts relating to this contract are the following: on August 1, 1981, NALCO invited tenders the said work. BHEL also submitted its tender. It was accepted. NALCO issued a Letter of Intent [LOI] on June 3, 1982 specifying the time-schedule for the work. The units were to be made ready for commercial operation between March 1985 and November 1986. Pursuant to the LOI, BHEL commenced the work. It instructed its several units to manufacture the requisite machinery and equipment. Formal contracts, viz., supply contract and service contract were entered into much later, i.e., on March 15, 1985. The contract price under the supply agreement is Rs.295.37 crores. The supply contract specifies the price of each of the major items of machinery/equipment separately. It also provides the manner in which the contracted price was payable by NALCO. Now, what happened is this: Tiruchi unit, it appears, is engaged mainly in the manufacture of boiler systems. It was designated as the executing agency for the job at Angul including the responsibility of manufacturing and supplying the boiler systems required for setting up the power plants at Angul. The boiler system comprises innumerable parts and components, some of which are manufactured at the Hyderabad unit. The Tiruchi unit accordingly called upon the Hyderabad unit to manufacture those components/parts. The Hyderabad unit manufactured them and sent some of those parts/ components to Tiruchi for being incorporated into the boiler system and sent the remaining directly to Angul Orissa] to be incorporated into the boiler system in at the work-site. according to the practice uniformly followed by BHELs and accepted by the Andhra Pradesh Governments the parts components manufactured by the Hyderabad unit for incorporation in the boiler systems were treated as branch transfers not involving an element of sale, irrespective of the fact whether such parts/components were sent to Tiruchi or to fingul. Conversely, if the Tiruchi unit manufactured any parts/components to be incorporated in the machinery or system, the manufacture of which was entrusted to Hyderabad units the despatch of such parts/components from Tiruchi to Hyderabad unit or the work-site were treated as branch transfers arid not as sales. The tax was levied by the State in which the main machinery system was manufactured. No tax was levied by the State wherein the parts components were manufactured and sent for incorporation into the main machinery or system manufactured in other States. From the year 1984, however, the State of Andhra Pradesh started levying and demanding Central Sales Tax upon the value of the parts and components which were manufactured at Hyderabad unit and sent to Tiruchi or Anguls as the case may be for incorporat on-into boiler system manufactured by Tiruchi unit. BHEL protested against the said levy. It submitted that it has been paying the Central Sales Tax upon the value of the entire boiler system manufactured by the Tiruchi unit in the Tamil Nadu State and that if Central Sales Tax is levied upon the parts and components which were manufactured at Hyderabad and sent to Tiruchi or Angul for incorporation into the boiler system], it would amount to double taxation insofar as the said parts and Components are concerned. According to it, they were merely branch transfers. The Andhra Pradesh State did not agree. Similar stand was taken by other States as well and assessment proceedings were in progress in various States. It is at that stage that BHEL approached this Court by way of Writ Petition (C) No.1608 of 1987 under Article 32 of the Constitution complaining that more than one State is taxing the same sale under the provision of the Act, which is making its functioning difficult. It submitted that such simultaneous taxing is Creating an uncalled for financial burden upon it. It requested the Court to give appropriate directions to ensure that an inter State sale is not taxed by more than one State.

When the writ petition came up for hearing, it was brought to our notice that the Andhra Pradesh Sales Tax Appellate Tribunal has decided the said dispute [relating to certain assessment years] and that Tax Revision Cases preferred by BHEL were pending in the Andhra Pradesh High Court. The judgment of the Andhra Pradesh Tribunal was also placed before us. The Andhra Pradesh Tribunal had taken the view that insofar as the parts and components manufactured in the Andhra Pradesh unit and despatched to work-site at Angul were concerned, they must be treated as inter-State sales taxable in Andhra Pradesh State inasmuch as the said goods moved from Andhra Pradesh pursuant to the supply contract which was indeed a contract of sale. So far as the parts and components which were sent to Tiruchi are concerned, the Tribunal held that they cannot be treated to have been sold in the course of inter-State trade or commerce but that they represent merely branch transfers. While the State of Andhra Pradesh did not prefer any tax revisions against the judgment of the Tribunal, BHEL did, which meant that the decision of the Tribunal insofar as it held that the despatch of parts/components to Tiruchi constituted branch transfers became final. The only question in the said Tax Revision Cases before the Andhra Pradesh High Court, therefore, was whether the Tribunal was right in holding that the despatch of parts/components from the Andhra Pradesh Unit to Angul for incorporation into the boiler system at the work-site represented inter-State sales and whether they were taxable in the State of Andhra Pradesh. The High Court examined the said question at length and dismissed the Tax Revision Cases filed by BHEL agreeing with the view taken by the Tribunal, though on a different reasoning. Civil Appeals Nos. 5369-75 of 1996 are preferred against the judgment of the Andhra Pradesh High Court in the aforesaid Tax Revision Cases.

Accordingly, Civil Appeals Nos.5369 of 1996 are dismissed and Civil Appeals Nos.5362-68 of 1996 are disposed of with the aforesaid direction regarding adjustment/refund of taxes between the concerned States [who are parties to these appeals].

P A R T = I I I In this part, we shall deal with the controversy between BHEL and Orissa. Three batches of appeals, viz., civil appeals arising from Special Leave Petitions (C) Nos.5071-74 of 1991, 16840-49 of 1995 and Civil Appeals Nos.629-30 of 1994 are concerned with this controversy. Of these three batches of appeals, the third batch, Civil Appeals Nos.629-30 of 1994 pertaining to Assessment Years 1983-84 and 1984-85 has become infructuous for the reason that the assessment orders questioned therein have been set aside by the Orissa High Court which has remanded the matters to the assessing officer. Accordingly, these appeals are dismissed as infructuous. Civil appeals arising from Special Leave Petitions 71-74 of 1991 are preferred against the judgment of the Orissa Sales Tax Tribunal and they pertain to Assessment Years 1984-85 and 1985-86. Civil appeals arising from Special leave Petitions (C) Nos.16840- 49 of 1995 pertain to Assessment Years 1988-89 to 1993-94. These appeals are directed against the orders of assessment made by the Orissa authorities under the Orissa Sales Tax Act and against certain notices issued under the said Act. The controversy between the State of Orissa and BHEL arises in the following circumstances: BHEL has undertaken a number of works in the State of Orissa for setting up power generation plants. In each case, there are two contracts, viz., a supply contract and a service contract. The pattern of all these contracts is practically the same as the NALCO contracts referred to hereinabove. The stand of the State of Orissa is that the sale of the machinery and equipment stipulated under the supply contracts is a sale within the State of Orissa and, therefore, exigible to tax under the Orissa Sales Tax Act. The learned counsel for the State of Orissa says that there is many a reason in support of the said stand - which he indeed wanted us to consider. According to the learned counsel, the terms and conditions of the supply contracts and other attendant circumstances do establish that the sale of the machinery and equipment [specified in the supply contracts] has taken place within the State of Orissa and not in the course of inter-State trade or commerce. We do not, however, think it necessary to refer to the said material in view of the Order we are proposing in these matters. It is enough if we deal with the reasoning of the Tribunal contained in the judgment [under appeal on the first batch of these appeals] upholding the stand taken by the Orissa State in these matters. The reasoning of the Tribunal, in short, is this: initially a Letter of Intent was issued by the Orissa State, or by the customer in the State of Orissa [to take a instance, NALCO], on the basis of which BHEL commenced the work. The formal contracts [supply contract and service contract] were entered into much later. Under the Letter of Intent and the formal contracts:

We find it difficult to appreciate the reasoning and approach of the Tribunal. The first and main ground upon which it has been held that it is not an inter-State sale is that the goods sent [by rail or road] do not answer the description of the goods mentioned in the annexure to the LOI/supply contract. Obviously, the annexure mentions only the major items of machinery and equipment. These major items cannot be transported as such; transport has to be effected in sections and parts and assembled at the spot. For that reason, it cannot be said that the goods transported are not the goods agreed to be supplied. It is nobody's case that BHEL supplied some other goods than the goods agreed upon. Having thus erroneously excluded Section 3 of the Central Sales Tax Act, the Tribunal went to Section 4 and held that in the circumstances, the sales must be held to have taken place inside the State of Orissa. The discussion about endorsement of goods by NALCO to BHEL in Orissa and so on is rather ambiguous. Indeed, we need not pursue this discussion further for the reason that both Sri Mohanty and Sri V.A.Mohta, appearing for the State of Orissa, stated frankly that they cannot support the reasoning of the Tribunal. The learned counsel,however, submitted that in view of the several facts and reasons mentioned by them, the conclusion of the Tribunal is correct. The learned counsel submitted that NALCO contract was a turn-key contract; that having regard to the terms and conditions of the Letter of Intent, the formal contracts and the correspondence which passed between the parties, it must be held that the sale of the said machinery and equipment has taken place within the State of Orissa. Learned counsel also submitted that the factual basis upon which the Andhra Pradesh High Court has rendered its decision is not admitted by or acceptable to the State of Orissa. They pointed out that State of Orissa was not made a respondent to the writ petitions filed by BHEL in the Andhra Pradesh High Court which are the subject-matter of Civil Appeals Nos.5362-68 of 1996 and that there are a number of facts and features upon which it has to be held that the conclusion arrived at by the Orissa Tribunal is correct though not its reasoning. Counsel further submitted that the question whether a particular sale is an inter-State sale or an intra-State sale is a question of fact and is not a matter to be adjudicated by this Court in a writ petition under Article 32 of the Constitution. They submitted that on this ground alone these appeals should be dismissed and BHEL should be asked to pursue the remedies provided by the Orissa Act. They pointed out that some of the appeals are preferred directly against the assessment orders or against the notices issued by the assessing authorities under the Orissa Act and that there is no reason why this Court should entertain those appeals. It is also submitted that as against the judgment of the Tribunal, BHEL could have approached the Orissa High Court and that there is no particular reason why the judgment of the Tribunal is sought to be challenged directly in this Court under Article 136 of the Constitution.