(2011) 39 VST 257 (SC) Hyderabad Engineering Industries v. State of Andhra Pradesh

Facts:
The assessee claimed inter-State Stock transfers to its various depots situated outside the State as per ‘Forecasts’ to be delivered to M/s. Usha International Ltd. (UIL), under an agreement for sale entered with it. The sales tax authorities disallowed the claim of inter-State stock transfer and levied tax @10% under the CST Act. The Company filed appeal before SC against the judgment of the High Court confirming levy of CST on disputed inter-State stock transfers treated as inter-State sales by the assessing authorities.

Held:
(1) The consistent view of this Court appears to be that even if there is no specific stipulation or direction in the agreement, for an inter-State movement of goods, if such movement is an incident of that agreement or if the facts and circumstances of the case denote it, the conditions of section 3(a) would be satisfied.

(2) In the instant case, the movement of goods from the assessee’s factory to its various godowns situated in different parts of country was pursuant to ‘Sales agreements’ coupled with ‘Forecasts’ which are nothing but ‘indents’ or firm orders. It does not matter how much goods were delivered to the branch office, which just acted as a conduit pipe before it ultimately reached the purchasers’ hands. All that matters is that the movement of the goods is in pursuance of the contract of sale or as of necessary incident to the sell itself.

(3) After considering the facts of the case, finding of fact by the assessing authorities duly confirmed by the Tribunal, SC held that impugned delivery of goods by the dealer’s factory to its various depots situated outside the State for delivery of goods to UIL against ‘Forecasts’ and ultimate delivery of goods to UIL by its depots to UIL is an inter-State sale liable to tax under the CST Act in the State of AP.

Accordingly the appeal filed by the dealer was dismissed.