Research › Search › Judgment

Punjab High Court · body

2006 DIGILAW 4046 (PNJ)

STEEL AUTHORITY OF INDIA v. STATE OF HARYANA.

2006-10-18

ADARSH KUMAR GOEL, RAJESH BINDAL

body2006
JUDGMENT This order will dispose of S.T.C. Nos. 4 and 5 of 1996. The facts have been extracted from S.T.C. No. 5 of 1996. This is a petition under section 42 of the Haryana General Sales Tax Act, 1973 (for short, "the State Act"), seeking a direction to the Sales Tax Tribunal, Haryana (for short, "the Tribunal") for referring following questions of law for opinion of this court arising out of its order passed in S.T.A. No. 684 of 1991-92 and S.T.A. No. 318 of 1992-93 in respect of assessment years 1981-82 and 1982-83 : "(a) Whether the transactions in question could be treated as inter-State sale merely because the assessee had mentioned the address of the purchasing dealer that of Delhi and that fact was incorporated in the sale invoice ? (b) Whether the reviewing authority could decide the matter at its own level without examining the evidence in question ? (c) Whether the movement of goods did take place in pursuance of any contract of sale or not ? (d) Whether once the delivery is given to a party within the State of Haryana and its payment received in Haryana, the obligation of the selling dealer is over or not ? (e) Whether the case was a case which required to be remanded back for permitting the assessee to lead evidence and more so when the Tribunal had remanded the case and given opportunity for furnishing 'C' certificates ? (f) Whether the Tribunal can fix a short time span for production of 'C' certificates ? and (g) Whether in the facts and circumstances of the case, when the grounds taken in (i) to (v) above while deciding the matter, were not taken into consideration, would entitle the assessee to claim rectification ?" Case of the assessee is that it is engaged in manufacturing and selling of iron and steel products and during the assessment year 1981-82, it made certain sales at Faridabad which were shown in the return filed as intra-State sales which were accordingly assessed by the assessing authority vide assessment order dated March 26, 1985, annexure P1. The Deputy Excise and Taxation Officer-I, Faridabad, exercising suo motu revisional power under section 40(2) of the State Act, treated these sales as inter-State sales on the ground that the goods moved out of the State since the bills had been raised in the name of customers outside the State. Accordingly, it was directed that tax at the rate of eight per cent was payable under the Central Sales Tax Act, 1956 (for short, "the Central Act") and the petitioner was liable to pay the difference of Rs. 7,15,281. The order is dated August 29, 1991, annexure P2. The petitioner - assessee filed an appeal before the Tribunal contesting the finding that the sales were inter-State sales. The Tribunal dismissed the appeal vide order dated February 27, 1996, annexure P6. The assessee, thereafter, filed a petition for reference of questions of law to this court, which was dismissed by the Tribunal vide annexure P7. Case of the assessee is that sales in question have to be treated as intra-State sales having regard to the fact that the assessee made delivery at its stockyard and was not concerned about the destination of goods after delivery. Reliance has been placed on judgment of the honourable Supreme Court in Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207; [1976] 2 SCC 44 and judgment of the Karnataka High Court in Ranjeet Trading Co. v. Commercial Tax Officer, Challakere Circle, Chitradurga District [1994] 94 STC 134. We are of the view that the questions of law raised by the assessee, though arise for consideration and having regard to the circumstances of the case, particularly the fact that the petition has been pending for the last ten years, we deem it appropriate to treat the questions raised as referred to this court as the facts necessary for answering the questions are on record and proceed to decide the same. The finding of the revisional authority is as under : "As regards the irregularity pointed out at Serial No. 1 the dealer has furnished a written reply vide his No. FS-6(ST) 91/723 dated January 11, 1991. In this reply, the dealer has pleaded that as per the procedure of the company, a customer situated outside the State of Haryana if he takes delivery from Faridabad Stockyard, they charge local sales tax since the delivery is being effected in the State of Haryana. In this reply, the dealer has pleaded that as per the procedure of the company, a customer situated outside the State of Haryana if he takes delivery from Faridabad Stockyard, they charge local sales tax since the delivery is being effected in the State of Haryana. He further adds that if such consignments are being despatched by train to other State by them to such customer's destination, then C.S.T. is charged. I have gone through the reply submitted by the dealer. The dealer has stated that the delivery has been given at Faridabad, but he has not produced any evidence in this regard. Further the bills have been raised in the name of customers outside the State of Haryana like D.D.A. Delhi, N.T.P.C. Delhi, and S.K. Construction, N. Rly., Delhi, etc. Further, the very interesting aspect of the dealer's reply is that he treats inter-State sales only to the goods which are sent by train. The contention of the dealer is not convincing as the goods sent by road to outside the State of Haryana cannot be treated as intra-State sales. Thus, I treat such sales as inter-State sales which amounts to Rs. 1,85,57,772.65." Finding recorded by the Tribunal is as under : "... It is not disputed that the sale bills issued by the appellant were in the name of the parties of Delhi like D.D.A., N.T.P.C. and S.K. Construction Delhi, etc. None of the bills in dispute pertains to a party of Haryana State. The contention of the appellant that the delivery of the goods was given at Faridabad has no force as he has not adduced any evidence in support of this claim which may suggest that the delivery of the goods was given at Faridabad. Rather the case is strongly in favour of the department as all the sale bills pertain to the parties of Delhi." Learned counsel for the assessee submitted that the only reason given for holding the sales to be inter-State sales, is address of customers outside the State. The Revenue was required to show that delivery of goods did not take place within the State, which was a condition precedent for holding the sales to be inter-State sales. The goods were within the State when the contract of sale took place and delivery was effected within the State. The Revenue was required to show that delivery of goods did not take place within the State, which was a condition precedent for holding the sales to be inter-State sales. The goods were within the State when the contract of sale took place and delivery was effected within the State. Sections 3 and 4 of the Central Sales Tax Act, 1956 lay down principles for determining when a sale or purchase is within the State and when a sale or purchase is in the course of inter-State trade or commerce. The said provisions are as under : "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; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation 1. - Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2. - Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State. 4. When is a sale or purchase of goods said to take place outside a State. - (1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. When is a sale or purchase of goods said to take place outside a State. - (1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. (2) A sale or purchase of goods shall be deemed to take place inside a State, if the goods are within the State, - (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation. - Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of this sub-section shall apply as if there were separate contracts in respect of the goods at each of such places." A perusal of order, annexure P2, shows that the revisional authority has gone by the name of the customers outside the State on the bills without holding enquiry about the place of delivery. This could not be treated as conclusive. Relying upon the judgment of the honourable Supreme Court in Commissioner of Sales Tax v. Suresh Chand Jain [1988] 70 STC 45, learned counsel for the assessee submitted that in revisional proceedings, onus is on the Revenue to disprove the claim of the assessee that the sale in question was intra-State sale and not inter-State. A Constitution Bench of the honourable Supreme Court in State of A.P. v. National Thermal Power Corporation Ltd. [2002] 127 STC 280; AIR 2002 SC 1895 , examined the question and held : "24. It follows as a necessary corollary of these principles that a movement of goods which takes place independently of a contract of sale would not fall within the meaning of inter-State sale. In other words, if there is no contract of sale preceding the movement of goods, obviously the movement cannot be attributed to the contract of sale. It follows as a necessary corollary of these principles that a movement of goods which takes place independently of a contract of sale would not fall within the meaning of inter-State sale. In other words, if there is no contract of sale preceding the movement of goods, obviously the movement cannot be attributed to the contract of sale. Similarly, if the transaction of sale stands completed within the State and the movement of goods takes place thereafter, it would obviously be independently of the contract of sale and necessarily by or on behalf of the purchaser alone and, therefore, the transaction would not be having an inter-State element. Precedents are legion; we may briefly refer to some of them. In English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 (SC); [1977] 1 SCR 631, this court held that when the movement of the goods from one State to another is an incident of the contract, it is a sale in the course of inter-State sale and it does not matter which is the State in which the property passes. What is decisive is whether the sale is one which occasions the movement of goods from one State to another. In Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457 (SC); [1979] 2 SCC 242, it was observed that a sale would 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 provided, however, that such movement was the result of a covenant in the contract of sale or was an incident of the contract. Similar view was expressed in Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301 (SC); [1985] 4 SCC 173. Similar view was expressed in Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301 (SC); [1985] 4 SCC 173. In Manganese Ore (India) Ltd. v. Regional Assistant Commissioner of Sales Tax, Jabalpur [1976] 37 STC 489 (SC); [1976] 4 SCC 124, after referring to Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207 (SC); [1976] 2 SCC 44, it was observed that so far as section 3(a) of the CST Act is concerned there is no distinction between unascertained or future goods and goods which are already in existence, if at the time when the sale takes place these goods have come into actual existence." In view of the above, if sale was completed within the State, movement of goods outside the State or mentioning of name of the customers having address outside the State was not enough for holding that the sales were in the course of inter-State trade. The revisional authority has not referred to or relied upon any material on record except the address of the buyer to substantiate that the goods were to move outside State as a result of contract between the assessee and the buyer. No finding has been recorded in the impugned order that delivery took place outside the State. We, therefore, remand the matter for fresh decision to the revisional authority, i.e., the Deputy Excise and Taxation Commissioner (I), Faridabad (East) to examine this question by allowing the assessee to lead evidence. One of the additional issue raised in S.T.C. No. 4 of 1996 is the effect of retrospective cancellation of certificate of registration of the purchasing dealers after the original assessment was framed. Relying on a judgment of this court in Devinder Kumar Kewal Kumar v. State [1972] 30 STC 352, it is contended that the crucial date for the purpose of assessee is the date of transaction and not subsequent retrospective action of cancellation of registration certificate. Still further, subsequent fact, which is not part of record at the time of assessment cannot be taken into consideration. Since the matter is being remitted back to the DETC for fresh consideration, even this aspect of the matter shall also be considered at the time of passing of the order. The questions are answered accordingly. The petition is disposed of.