Case: M/S. Hyderabad Engineering Industries Vs. State Of A.P

between the parties for the supply of manufactured goods by the assessee to UIL and the agreement is not binding on the parties, since it does not provide for any claim for damages, if there is any breach of any of the conditions stipulated therein by any one of the parties. It is stressed by the learned senior counsel that the assessee company, since it has branches in various parts of the country, its manufactured products are stocked in those branches and the branches in turn, have effected sales of those goods to consumers which would include UIL also. This argument is also noticed by the final fact finding authority, namely the Sales Tax Appellate Tribunal and has negatived the same by assigning cogent reasons. The Tribunal, after reappreciating the entire documents available on the record and also the modus operandi adopted by the assessee in its well considered order, has concluded that the so called `forecasts are nothing but request made by UIL for supply of goods to meet the requirements of the consumers in various parts of the country. Though, the said communication is termed as `forecasts, according to the Tribunal, they are nothing but firm orders placed by the UIL with the assessee for supply of particular type of goods and particular quantity pursuant to their understanding reflected in the `sales agrement, which is continuing one for the continuous supply of goods during the period of agreement which stretches over a period of 5 years, it is difficult to accept the submission of the learned senior counsel that the `sales agreement is only for the purpose of purchasing of their goods and selling in different parts of the country by UIL which has its offices wherever the assessee has its godowns of branch offices and also difficult to accept that there was no movement of goods pursuant to their `letter of allocations, which the assessee would contend that it is not a firm commitment or firm order for the supply of goods. To be fair to the learned senior counsel, we also perused number of `letters of allocations sent by UIL to the assessee from time to time and the response thereof of the assessee. On a perusal of the same, it is clear that an order was placed by UIL is a composite form to supply of goods through their branch offices and the movement of the goods thereto from the assessees factory to the assessees godown was to fulfill the demand made pursuant to the `letters of allocation which the assessee claims that the same is in the nature of forecast. In our view, the movement of the goods from the assessees factory to its various godowns situated in different parts of the country was pursuant to `sales agreement coupled with `forecasts which are nothing but `indents or firm orders. Therefore, in our opinion, the transaction between the assessee with its branch offices is a clear case of inter-State sales and not branch transfers, as claimed by the assessee. 43. Shri Bagaria, learned senior counsel, submitted that the branch offices of the assessee would also effect sales of products supplied by the assessee to other customers including State and Central Govt. Therefore, it is contended that the branch offices of the assessee had full discretion to sell the goods to any person of their choice. In our view, merely because the branch office could also effect supplies directly to some of the bulk consumers, it cannot be said that all supplies that are made to branch offices are not pursuant to the Sales Agreement and letter of allocation of UIL. Since the assessee could not furnish the exact figure insofar as such sales the assessing authority has granted exemption on a turnover of `87,57,071/-, being 10% of the total value of the claim towards stock transfer. 44. The learned senior counsel Shri Bagaria contended that the case law on which reliance placed by the High Court and other Statutory authorities are distinguishable and none of those decisions support the case of the Revenue. This contention of the learned senior counsel need not detain us for long, since the assessing authority, in the instant case, after carefully considering the relevant clauses in the sales agreement and the voluminous correspondence between the assessee and the UIL, has given its finding that the transaction in question is pure and simple inter-State sales and falls within the purview of Section 3(a) of the Central Act. This finding of fact has received the approval of the First Appellate Authority and the Sales Tax Appellate Tribunal which is the last fact finding authority in the appeals filed by the assessee.45. The learned senior counsel also contended that the assessing officer is expected to look into each transaction in order to find out whether a completed sale had taken place which could be brought to tax under Section 3(a) of the Central Act. Reliance is placed on the Constitution Bench decision of this Court in the case of Tata Engineering and Locomotive Co. Ltd. (supra). We are bound by the view expressed by the Constitution Bench decision of this Court. However, in the present case, the assessing officer has not just picked up a stray transaction to hold that the entire transaction for the entire period of assessment is inter-State sales, which would attract the charging provision. In our considered view, the assessing officer, in his detailed and well considered order, has looked into nearly 378 documents and voluminous correspondence between the assessee and UIL and has discussed and co-related the documents to prove on facts that the disputed transaction is inter-State sales though the assessee claims that it is a mere stock transfer. Therefore, we cannot accept the submission of the learned senior counsel in this regard. Bearing in mind the provisions of Section 3(a) of the Central Sales Tax Act, 1956 and on the facts of the case, the transactions in question were inter-State sales taxable under the Central Act.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]21. In the instant case, the assessing authority and the Tribunal have recorded a finding of fact that there were prior contracts between Usha Sales Ltd. and the assessee and in pursuance of those contracts, the goods moved from the assessees factory at Hyderabad to its Branch offices to be delivered to Usha Sales Ltd. or their nominees. In order to appreciate the contention canvassed, it is necessary to set out certain clauses from the salesour view, though the ultimate purchaser UIL placed orders for a particular quantity of goods to be supplied, the assessee did not supply the actual quantity indented for. We do not, however, think that this makes any difference to the application of Section 3(a) of the Central Act. In our view, 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 movement of the goods is in pursuance of the contract of sale or as necessary incident to the sale itself. Further, the sales agreement is for a period of five years. If there is short supply of the goods than what was indented for, then the same could be adjusted in the subsequent dispatch. Therefore, to contend that there was no firm order placed by UIL with the assessee and accordingly, it would not come within the purport of Section 3(a) of the Central Act and they are mere branch transfers, cannot be accepted. We may also note that the assessing officer, while considering this stand of the assessee, has made reference to several correspondence for the period from April, 1981 to March, 1982 and has come to the conclusion though both the assessee and UIL terms those correspondence as mere letter of allocations, they are infact in the nature of indents placed by UIL with the assessee for the supply of a particular model of fans, particular quantity and the destinations of delivery. This finding of fact is confirmed by the final fact finding authority namely, the State Tax Tribunal. To us, this finding of fact does not appear to be perverse, which would call for ourthe said communication is termed as `forecasts, according to the Tribunal, they are nothing but firm orders placed by the UIL with the assessee for supply of particular type of goods and particular quantity pursuant to their understanding reflected in the `sales agrement, which is continuing one for the continuous supply of goods during the period of agreement which stretches over a period of 5 years, it is difficult to accept the submission of the learned senior counsel that the `sales agreement is only for the purpose of purchasing of their goods and selling in different parts of the country by UIL which has its offices wherever the assessee has its godowns of branch offices and also difficult to accept that there was no movement of goods pursuant to their `letter of allocations, which the assessee would contend that it is not a firm commitment or firm order for the supply of goods. To be fair to the learned senior counsel, we also perused number of `letters of allocations sent by UIL to the assessee from time to time and the response thereof of the assessee. On a perusal of the same, it is clear that an order was placed by UIL is a composite form to supply of goods through their branch offices and the movement of the goods thereto from the assessees factory to the assessees godown was to fulfill the demand made pursuant to the `letters of allocation which the assessee claims that the same is in the nature of forecast. In our view, the movement of the goods from the assessees factory to its various godowns situated in different parts of the country was pursuant to `sales agreement coupled with `forecasts which are nothing but `indents or firm orders. Therefore, in our opinion, the transaction between the assessee with its branch offices is a clear case of inter-State sales and not branch transfers, as claimed by theour view, merely because the branch office could also effect supplies directly to some of the bulk consumers, it cannot be said that all supplies that are made to branch offices are not pursuant to the Sales Agreement and letter of allocation of UIL. Since the assessee could not furnish the exact figure insofar as such sales the assessing authority has granted exemption on a turnover of `87,57,071/-, being 10% of the total value of the claim towards stockour considered view, the assessing officer, in his detailed and well considered order, has looked into nearly 378 documents and voluminous correspondence between the assessee and UIL and has discussed and co-related the documents to prove on facts that the disputed transaction is inter-State sales though the assessee claims that it is a mere stock transfer. Therefore, we cannot accept the submission of the learned senior counsel in this regard. Bearing in mind the provisions of Section 3(a) of the Central Sales Tax Act, 1956 and on the facts of the case, the transactions in question were inter-State sales taxable under the Central Act.