By C. B. Thakar Advocate G. G. Goyal Jana K Vaghani Chartered Accountants
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Inter-State Sale/Stock Transfer-Dispatch of Goods by Factory to its branch Out Side the State–To Meet Monthly Requirements Of Goods as per Order Placed To Branch By Customer- Transaction Of Inter-State Sale- Taxable In the State from Which Goods Dispatched By the Factory-Sections 3, 6 and 22(1B) of the Central Sales Tax Act, 1956.
Facts
The appellant, a public sector Company, having stock point and Kolkata and factory in the State of Andhra Pradesh received orders from two customers of west Bengal for supply of Zinc and lead for supply of goods of specified quantity at specified rate as per schedule of delivery. One of the conditions of the order was that in case of breach of any condition of the contract, the sum of Rs. 50,000/- paid by the customer at the time of placing order, could be forfeited by the appellant company. The factory of the appellant company situated in Andhra Pradesh dispatched the goods to its Kolkata and Jharkhand branch showing the appellant company as consignor and consignee in all documents of transport of goods including excise gate pass. The Kolkata and Jharkhand branch of the company supplied goods to the customer and paid tax at applicable rate under the local sales tax law. The Company in the State of Andhra Pradesh showed the movement of goods to its Kolkata and Jharkhand branch as inter-State stock transfer. The sales tax authorities in AP assessed the above transaction by treating it as inter-State sale of goods taking place from the State of AP, which was confirmed by the State Appellate Tribunal. The Company filed appeal against the said judgment of Tribunal before the Central State Appellate Authority (CSTAA) u/s. 20 of The Central Sales Tax Act, 1956.
Held
The scope of an appeal filed u/s. 20 of The CST Act is wide inasmuch as an appeal lies against an order determining issues relating to stock transfers of goods in so far as they involve a dispute of inter-state nature. The authority has the right not only to consider any question of law that may arise, but also to reassess the facts and consider the correctness of the inference drawn by the lower authorities including the Tribunal.
The authority further held that specific orders were made by the branch office of the appellant company to the customers for sale of their products on the conditions mentioned therein. The customers placed orders for supply of specified quantity of goods in specified monthly quantities. It is true that even though the orders placed by the customers indicated the specified quantities to be supplied every month and the supplies did not always confirm to it, that by itself may not tilt the scale in favour of the appellant. Similarly, the fact that in some months, more quantities were supplied to the customers or that the goods sent from the factory to the branch were not earmarked may not also change the position. It is not for the Tribunal to consider each element individually and appreciate its impact on the transaction. On the other hand, it would be the proper thing to take note of all the circumstances, in the light of the facts available and come to a conclusion whether the movement of goods was triggered by the orders of purchase placed on the branch office.
The authority on an appreciation of all facts and circumstances confirmed the decision of the State Tribunal treating the transaction as inter-state sale taxable in the State of AP under The CST Act. It also directed the State of West Bengal and Jharkhand, to transfer the refundable amount of tax based on its order to the State of AP to which tax was due on the disputed transactions.
