tition No 7337 of 1981
Under Article 32 of the Constitution of India
YS Chitale and DN Misra for the Petitioners
NC Talukdar MC shandare Miss A Subhashici MN Shroff and B Parthasarthi for the Respondents
784 The Judgment of the Court was delivered by PATHAK J
The first petitioner Ms Sahney Steel and Press Works Ltdhereinafter referred to as the Company J is a public limited company having the registered office and factory at Hyderabad
784 The Judgment of the Court was delivered by PATHAK J The first petitioner Ms Sahney Steel and Press Works Ltdhereinafter referred to as the Company J
is a public limited company having the registered office and factory at Hyderabad
The second petitioner Shri Bhupendra Singh Sahney is a Director and shareholder of that company
The company has branches at Amritsar Bangalore Bombay Calcutta Coimbatore and Delhi
The registered office of the Company at Hyderabad is registered as a dealer under the Central Sales Tax Act as well as under the Andhra Pradesh General Sales Tax Act
The Company is engaged in the manufacture and sale of stampings and Laminations made out of steel sheets which are utilised as raw material for making electric motors transformers and similar goods
The branches of the company are mainly engaged in electing sales and looking after the sales promotion and Liaison work
The Company manufactures a standard goods according to the company s own designs and specifications b non standard goods according to the designs and specifications supplied by customers
In the course of its normal business the registered office despatches both standard and non standard goods manufactured at the Hyderabad factory to the branches
Such transfers made by the registered office to the branches at Bombay Calcutta and Coimbatore of non standard goods form the subject of The instant controversy
According to the petitioner the branch offices situate at Bombay Calcutta and Coimbatore
which themselves are registered as dealers under the Central Sales Tax Act and under the related State Sales Tax Acts receive orders from customers within and from outside the respective States for the supply of goods conforming to definite specifications and drawings
Those branch offices then advise the registered office at Hyderabad to manufacture and despatch the goods
On receipt of such advice from branch the goods are manufactured at the Hyderabad factory and thereafter despatched by the registered office to the branches by way of transfer of stock
Hie despatching the goods sometimes intimation is also given by the registered office to the customer concerned about the despatch of the goods to the destination indicated by him
Such goods are booked to sheaf  and sent by lorries
The goods received by the branches from time to time whether standard goods or non standard goods are entered in the stock accounts of the branches and are kept in stock by the branches for ultimate delivery to the customers
On 785 the goods reaching the branches they are inspected by the customers and accepted by them where the customers are local parties
Where delivery has to be effected to customers of other States the goods are despatched to them by the branch
The branches raise bills and receive the sales price
The branches furnish F  forms to the registered office under s6 A of the Central sales Tax Act in the case of stock transfers to the branches
These are the facts set forth in the writ petition
It appears that the sale of non standard goods WAS assessed to State Sales Tax under the Sales Tax Acts o Maharashtra West Bengal and Tamil Nadu
The Commercial Tax Officer Company Circle II Hyderabad however expressed the view that the company was liable to Central Sales Tax on the turnover of non standard goods and rejected the contention of the Company that the pertinent turnover was not so liable
For the assessment year 1979 80 he made an assessment order dated May 4 1981 assessing a turnover of Rs1295024873 representing what the petitioners claimed to be stock transfers from the Hyderabad registered office to the branches outside the State of Andhra Pradesh
By way of abundant caution the petitioner had prayed that in the event of their objection to the imposition of Central Sales Tax being overruled they should be allowed time to collect C  forms from the various customers to whom the branches had effected sales and to submit them to the Commercial Tax Officer
The Commercial Tax Officer however did not grant the Company the further time it sought for that purpose
The petitioners states that the Commercial Tax Officer has also issued notices dated May 2 1981 seeking to reopen the Central Sales Tax assessments already completed for the years 1977 78 and 1978 79
In the original assessments for those years the Commercial Tax Officer had excluded the disputed transactions relating to transfers of non standard goods from the registered office to the branches
The petitioners therefore pray for the quashing of the assessment order dated May 4 1981 made under the Central Sales Tax Act for the assessment year 1979 80 and the consequent demand of tax in so far as the assessment order includes within the assessed turnover the value of non standard goods transferred to the branches
The petitioners also pray for an order restraining the Commercial Tax Officer from reopening past assessments tor the purpose of including such transfers in the assessable turnover
Alternatively the petitioners pray that in the event 786 of the transactions being held liable to Central Sales Tax an opportunity should be given to the Company to file C  forms to enable it to avail of the concessional rate of tax envisaged under sub s1 of s8 read with sub s4 of s8 of the Central Sales Tax Act
A further prayer in the alternatives that the assessment made under the local Sales Tax Acts from the assessment year 1978 79 onwards in so far as the assessments include the turnover of the aforesaid stock transfers transferred by the registered office to the branches should be quashed
While making the assessment order for the assessment year 1979 80 the Commercial Tax Officer found that the branch offices of the company after procuring orders for the supply of goods with definite specifications and drawings advised the registered office at Hyderabad to manufacture and supply the goods in accordance therewith
After the goods were so manufactured in the factory at Hyderabad the registered office despatched the goods to the branches
The goods were collected by the branch offices and despatched to various customers according to the orders received earlier
The Commercial Tax Officer also found that except for the manufacture of goods according to the specifications received from the customers at the registered office and factory at Hyderabad also other activities including that of booking orders sales despatching billing and receiving of the sale price were being carried on by the branch offices situated outside the State of Andhra Pradesh
In the opinion of the Commercial Tax Officer the movement of the goods from Hyderabad to the stations outside the State was an incident of the contract incorporated in the specific orders procured by the branch offices and therefore the transactions were inter state sales within the terms of sub sa of s3 of the Central Sales Tax Act
The petitioners challenge the finding of the Commercial Tax Officer that the transactions in question constitute inter State sales
The petitioner contend that when the registered office of the company at Hyderabad despatched the manufactured goods to its branch office it was merely a transfer of stock from the registered office to the branch office and thereafter the movement of the goods started from the branch office to the buyer
It is urged that the registered office and the branch office were separately registered as dealers under the Sales Tax law and transactions effected by the branch office could not be identified with transactions effected by the registered office
The movement of the goods from Hyderabad to the branch office it is 787 said was only for the purpose of enabling the sale by the branch A office and was not in the course of fulfillment of the contract of sale
We are unable to agree
Even if as in the present case the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales despatching billing and receiving of the sale price the conclusions must be that the order placed by the buyer is an order placed with Company and for the purpose of fulfilling that order the manufactured goods commence their Journey from the registered office within the State of Andhra Pradesh to the branch office outside the State for delivery of the goods to the buyer
We must not forget that both the registered office and the branch office are offices of the same Company and what in effect does take place is that the Company from its registered office in Hyderabad takes the goods to its branch office outside tile State and arranges to deliver them to the buyer
The registered office and the branch office do not possess separate juridical personalities
The question really is whether the movement of the goods from the registered office at Hyderabad is occasioned by the order placed by the buyer or is an incident of the contract
If it is so as it appears no doubt to us its movement from the very beginning from Hyderabad all the way until delivery is received by the buyer is an inter State movement
In English Electric Company of India Ltd vs The Deputy Commercial Tax Officer  Ors1977 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 property in the goods passes
What is decisive is whether the sale is one which occasions the movement of goods from one State to another
It was also pointed out that the branches had no independent and separate entity that they were merely different agencies and even where a branch office sold the goods to the buyer it was a sale between the Company and the buyer
It is true that in that case the goods on manufacture at the Madras branch factory were directly despatched to the Bombay buyer at his risk and all prices were shown FOR Madras and the goods were delivered to the Bombay buyer at Bhandup through clearing agents In the instant case the goods were despatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not by the registered office at Hyderabad
In our opinion that makes no difference at all
The manufacture of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an incident of the contract 788 entered into with the buyer for it was intended that the same goods should be delivered by the branch office to the buyer
There was no break in the movement of the goods
The branch office merely acted as a conduit through which the goods passed on their way to the buyer
It would have been a different matter if the particular goods had been despatched by the registered office at Hyderabad to the branch office outside the State for sale in the open market and without reference to any order placed by the buyer
In such a case if the goods are purchased from the branch office it is not a sale under which the goods commenced their movement from Hyderabad
It is a sale where the goods moved merely from the branch office to the buyer
The movement of the goods from the registered office at Hyderabad to the branch office outside the State cannot be regarded as an incident of the sale made to the buyer
The law was clarified in Union of India and Another vs KG Khosla and Co Ltd and Others
1979 43 STC 457 where this Court 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 in incident of that contract
Two cases on opposite sides of the line were considered by this Court in KG Khosla and Co Ltd supra
In Tata Engineering and Locomotive Co Ltd vs Assistant Commissioner of Commercial Taxes Anr
1970 26 STC 354 1970 3 SCR 862 the appellant carried on the business of manufacturing trucks in Jamshedpur in the State of Bihar
The sales office of the appellant in Bombay used to instruct the Jamshedpur factory to transfer stocks of vehicles to the stock yards in various States after taking into account the production schedule and requirements of customers in different States
The stocks available in the stock yards were distributed from time to time to dealers
The transfer of the vehicles from the factory to the various stock yards was a continuous process and was not related to the requirement of any particular customer
Until an appropriation of the vehicle was made by the stock yard incharge against a contract of sale out of the stocks available with him it was open to the appellant to allot any vehicle to any purchaser or even to transfer the vehicles from the stock yard in the State to a stock yard in another State
It was held on the facts that the sale by the appellant to a purchaser from its stock yard was not an inter State sale
On the other side of the line is State of Bihar  Anr
vs Tata Engineering  Locomotive Co Ltd 1971 27 STC 127   In that case the turnover in dispute related to sales made 789 by the company to its dealers of trucks for being sold in the territories assigned to them under the dealership agreements
Each dealer was assigned an exclusive territory and under the agreement between the dealers and the company they had to place their indents pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the company
In pursuance of such delivery orders trucks used to be delivered in the State of Bihar to be taken over to the territories assigned to the dealers
Under the terms of the contracts of sale the purchasers were required to remove the goods from the State of Bihar to other States
The Court observed that if a contract of said contained a stipulation for such movement the sale would be an inter State sale
Considerable reliance has been placed by the petitioner on one of the illustrations given by this Court in Balabhagas Hulaschand and Another vs State of Orissa 1976 37 STC 207 where Case NoII was set out as follows Case NoII
A who is a dealer in state X agrees to sell goods to but he books the goods from state X to State Y in his own name and his agent in state Y receives the goods on behalf of A Thereafter the goods are delivered to B in State Y and if B accepts them a sale takes place
it will be seen that in this case the movement of goods is neither in pursuance of the agreement to sell nor is the movement occasioned by the sale
The seller himself takes the goods of State Y and sells the goods there
This is therefore purely ar
internal sale which takes place in State Y and falls beyond the purview of section 3a of the Central Sales Tax Act not being an inter State sale
It is not clear from this illustration whether the goods were particular and specific goods earmarked for delivery to the buyer when they commenced their movement from State X Apparently not because it is pointed out that the movement of The goods was neither in pursuance of the agreement to sell nor was the movement occasioned by the sale The case is distinguishable from the present one where particular goods were manufactured in Hyderabad in satisfaction of an order placed by one buyer who desired delivery outside the State
The goods moved from the registered office at Hyderabad as the result of a covenant in the contract of sale or an incident of that contract that the goods 790 manufactured at Hyderabad according to the specifications stipulated by the buyer should be the very goods delivered to him outside the State
Upon all these considerations we are of opinion that the Commercial Tax Officer is right in holdings that the sale transactions were inter State sales inasmuch as they satisfy the terms of clause a of s3 of the Central Sales Tax Act
Having held that the disputed transactions are inter State sales it is only appropriate that an opportunity should be give to the Company to collect C  Forms from the buyers for the purpose of obtaining relief under sub sl of s8 read with sub s4 of s8 of the Central Sales Tax Act
The question whether the transactions could be described as inter State sales was in doubt all along and it is only now that the doubt can be said to have been finally resolved
Accordingly we direct the Commercial Tax Officer to afford a reasonable opportunity to the Company to collect C  Forms and furnish them to the assessing authority before making an assessment against the Company in respect of such transactions
We understand that so far as the turnover for the assessment year 1979 80 is concerned the assessment order has been set aside in appeal and the case has been remanded to the assessing authority for Granting sufficient time to the Company to file the C  Forms in order to enable it to avail of the concessional rate of tax
The petitioners have prayed for the further relief that as the aforesaid transactions have been held to be inter State sales their inclusion in the assessments made under the corresponding State Sales Act should be deleted
We give liberty to the petitioner Company to make an application to the assessing authority concerned for the grant of such relief and if the application is made within two months from 10985 we direct the said assessing authority to entertain the application notwithstanding any period of limitation prescribed for such a proceeding and to dispose of the claim in accordance with law
The writ petition is dismissed subject to the directions set forth above
There is no order as to costs
SR Petition dismissed


Summary:
Ms Sahney Steel and Press Works Ltd is a public limited company having its registered office and factory at Hyderabad
It is registered as a dealer under the Central Sales Tax Act as well a under the Andhra Pradesh General Sale Tax Act
It has branch offices at Amritsar Bangalore Bombay Calcutta Coimbatore and Delhi
They are all registered as dealers under the Central Sales Tax Act and under the related State Sales Tax Acts
The branches of the company are mainly engaged in effecting sales and looking after the sales promotion and liaison work
The company manufactures a standard goods according to the company s own designs and specifications b non standard goods according to the designs and specifications supplied by customer
In the course of its normal business the registered office despatches both standard and non standard goods manufactured at the Hyderabad factory to the branches
The branch offices situate at Bombay Calcutta and Coimbatore receive orders from customers within and from outside the respective States for the supply of goods conforming to definite specifications and drawings
Those branch offices then advise the registered office at Hyderabad to manufacture and despatch the good
On receipt of such advice from the branch the goods are manufactured at the Hyderabad factory and thereafter despatched by the registered office to the branches by way of transfer of stock
While despatching the goods sometimes intimation is also given by the registered office to the customer concerned about the despatch of the goods to the destination indicated by him
Such goods are 781 booked to self  and sent by lorries
The goods received by the branches from time to time whether standard goods or non standards goods are entered in the stock accounts of the branches and are kept in stock by the branches for ultimate delivery to the customers
On the goods reaching the branches they are inspected by the customer and accepted by them where the customers are local parties
Where delivery has to be effected to customers of other States the goods are despatched to them by the branch
The branches raise bills and receive the sales price
The branches furnish F  forms to the registered office under section 6 A of the Central Sales Tax Act in the case of stock transfers to the branches
The sale of non standard goods was Assessed to State  sales Tax under the Sales Tax Acts of Maharashtra West Bengal and Tamil Nadu
The Commercial Tax Officer Company Circle II Hyderabad however expressed the view that the company was liable to Central  sales Tax on the turn over of non standard goods
For the assessment year 1979 80 he made an assessment order dated May 4 1981 assessing a turn over of Rs 1295024873 representing what the petitioners claimed to be stock transfers from the Hyderabad registered office to the branches outside the State of Andhra Pradesh
By way of abundant caution the petitioners had prayed that in the event of their objection to the imposition of Central Sales Tax being overruled they should be allowed time to collect C  forms from the various customers to whom the branches held effected sales and to submit them to the Commercial Tax Officer
The Commercial Tax Officer however did not grant the company the further time it sought for that purpose
The Commercial Tax Officer has also issued notices dated May 2 1981 seeking to reopen the Central sales Tax Assessments already completed for the years 1977 78 and 1978 79
In the original assessments for those years the Commercial Tax Officer had excluded the disputed transactions relating to transfers of non standard goods from the registered office to the branches
Once the Writ Petitions under Article 32 of the Constitution praying for i to quash the assessment order dated May 4 1981 made under the Central Sales Tax Act for the assessment year 1979 80 and the consequent demand of tax in respect of the non standard goods ii to restrain the Commercial Tax Officer from reopening the past assessments iii alternatively in the event of the transactions being held liable under the Central Sales Tax Act to afford opportunity to the company to file C  forms to enable it to avail of the concessional rate of tax envisaged under section 81 of the Central Sales Tax Act and iv further 782 alternatively to quash the assessments made under the local Sales Tax Acts for the assessment years 1978 79 onwards in so far as the assessments include the turn over of the aforesaid stock transfers transferred by the registered office to its branches
Dismissing the petition the Court  HELD 11 The sale transactions were inter state sales in as much as they satisfy the terms of clause a of section 3 of the Central Sales Tax Act
790 B 12 It cannot be said that the Movement of the goods from Hyderabad to the branch office was only for the purpose of enabling the sale by the branch office and was not in the course of fulfillment of the contract of sale
Even if the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales despatching billing receiving of the sale price the conclusion must be that the order placed by the buyer is an order placed with the Company and for the purpose of fulfilling that order the manufactured goods commence their journey from the registered office within the State of Andhra Pradesh to the Branch office outside the State for delivery of the goods to the buyer
Further both the registered office and the branch office are offices of the same Company and what in effect does take place is that the Company from its registered office in Hyderabad takes the goods to its branch office outside the State and arranges to deliver them to the buyer
The registered office and branch office do not possess separate juridical personalities
The question really is whether the movement of the goods from the registered office at Hyderabad is occasioned by the order placed by the buyer or is an incident of the contract
The answer being in the affirmative its movement from the very beginning from Hyderabad all the way until delivery is received by the buyer is an inter state movement
787 A DF 13 The fact that the goods were despatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not by the registered office at Hyderabad makes no difference at all
The manufacture of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an incident of the contract entered into with the buyer for it was intended that the same goods should be delivered by the branch office to the buyer
There was no break 783 in the movement of the goods
The branch office merely acted as a conduit through which the goods passed on their way to the buyer
It would have been a different matter if the particular goods had been despatched by the registered office at Hyderabad to the branch office outside the State for sale in the open market and without reference to any order placed by the buyer
In such a case if the goods are purchased from the branch office it is not a sale under which the goods commenced their movement from Hyderabad
It is a sale where the goods moved merely from the branch office to the buyer
The movement of the goods from the registered office at Hyderabad to the branch office outside the State cannot be regarded as an incident of the sale made to the buyer
787 F H 788 A C English Electric Company of India Ltd vs The Deputy Commercial Tax officer  Ors   Union of India and Another vs KG Khosla and Co Ltd and Others 1979 43 STC 457 Tata Engineering and Locomotive Co Ltd vs Assistant Commissioner of Commercial Taxes  Anr 1970 26 STC 354 1970 3 SCR 862 State of Bihar  Anr
Tata Engineering Locomotive Co Ltd 1971 27 STC 127 1971 2 SCR 849 and Balabhagas Hulaschand and another vs State of Orissa 1976 37 STC 207 referred to
The Court directed i the Commercial Tax Officer to afford a reasonable opportunity to the Company to collect C  Forms and furnish them to the assessing authority before making an assessment against the Company in respect of such transactions ii the petitioner Company may make an application to the assessing authority for deleting the turnover of sales found to be inter State sales concerned for re opening the assessments made under the State Sales Tax Acts and iii if the application is made within two months from September 10 1985 the said assessing authority should entertain the application notwithstanding any period of limitation prescribed for such a proceedings and to dispose of the claim in accordance with law