Case: Tata Engineering &amp; Locomotive Co. Limited Vs. The Assistant Commissioner Of Commercialtaxes &amp; Another

was not completely disassociated from the allocation made to the dealers. Consequently it would (?) not be said that the movement of the vehicles from the works at Jamshedpur was completely unrelated to contract of sale".It was recognised that in some cases vehicles had been delivered to some dealers in advance against the allocation made for the following months. The appellant further showed and this was accepted that 15 vehicles from the Delhi stockyard were transferred to Karnal stockyard. After finding that the allocation letters together with their confirmation constituted transactions of sale the Assistant Commissioner referred to the dealership agreement and stated that on placing of the demand by the dealer a complete contract came into existence. He proceeded to regard the statements which were required to be furnished to the dealers in accordance with the letter dated June 14, 1963 addressed by the appellant to them as firm orders within the meaning of the relevant clause in the dealership agreement. The final conclusion of the Assistant commissioner was that as contemplated by clause 11 (b) of the dealership agreement every one of the dealers placed his demand or orders for supply which amounted to a contract for the sale of the vehicles demanded and clause 12 of the dealership agreement under which allocations were made by the appellant to the dealers amounted to fulfillment of orders. The appellant had throughout maintained that firm orders were no longer placed with it by the dealers after 1958. It has not been found or shown that any such orders were in existence relating to the transactions in dispute. Thus on the question that transactions of sale took place the decision of the Assistant Commissioner rested mainly on the allocation letters and the statements furnished by the dealers as required by the circular of June 14, 1963.10. It is somewhat unfortunate that the High Court fell into the same error as the Assistant Commissioner as it accepted his findings on the ground that they were on questions of fact and could not be re-examined by the High Court. It was said that the terms and covenants of the contract made it clear that since the vehicles were despatched in pursuance of orders irrespective of appropriation or specific vehicles being sent to specific dealers the dispatch and supply to the dealers must of necessity be regarded as integral part of a single transaction. It is difficult to see what contracts the High Court had in mind because none have been shown to us even by the learned Advocate-General for the State. He also relied largely on the findings of the Assistant Commissioner and urged that they were not open to re-examination.11. The explanation of the procedure followed by the appellant which prima facie seems to be business-like and plausible together with the proved absence of any firm orders lends support to the argument pressed on its behalf that the allocation letters and the statements furnished by the dealers did not by themselves bring about transactions of sale within the meaning of Section 2 (g) of the Act.The Assistant Commissioner himself found that sometimes the vehicles were sent from the works at Jamshedpur even before an allocation letter had been issued. It would appear from the material placed before us that generally the completion of the sales to the dealers did not take place at Jamshedpur and the final steps in the matter of such completion were taken at the stockyards. Even if the appellant took into account the requirements of the dealers which it naturally was expected to do when the vehicles were moved from the works to the stockyards it was not necessary that the number of vehicles allocated to the dealer should necessarily be delivered to him. The appropriation of the vehicles was done at the stockyards through specification of the engine and the chassis number and it was open to the appellant till then to allot any vehicle to any purchaser and to transfer the vehicles from one stockyards to another.Even the Assistant Commissioner found that on some occasion vehicles had been moved from stockyards in one State to a stockyard in another State. It is not possible to comprehend how in the above situation it could be held that the movement of the vehicles from the works to the stockyards was occasioned by any covenant or incident of the contract of sale. As regards the so-called firm orders it has already been pointed out that none have been shown to have existed in respect of the relevant periods of assessment. Even on the assumption that any such orders had been received by the appellant they could not be regarded as anything but mere offers in view of the specific terms in Exht. I (the dealership agreement) according to which it was open to the appellate to supply or not to supply the dealer with any vehicle in response to such order. What was, therefore, relevant was the acceptance of firm orders occasioning the movement of vehicles out of the State of Bihar.12. Another serious infirmity in the order of the Assistant Commissioner was (a matter which even the Advocate-General quite fairly had to concede) that instead of looking into each transaction in order to find out whether a completed contract of sale had taken place which could be brought to tax only if the movement of vehicles from Jamshedpur had been occasioned under a covenant or incident of that contract the Assistant Commissioner based his order on mere generalities. It has been suggested that all the transactions were of similar nature andthe appellants representative had himself submitted that a specimen transaction alone need be examined. In our judgment this was a wholly a wrong procedure to follow and the Assistant Commissioner, on whom the duty lay of assessing the tax in accordance with law, was bound to examine each individual transaction and then decide whether it constituted an inter-State sale exigible to tax under the provisions of the Act.

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

Explanation:
1[ds]10. It is somewhat unfortunate that the High Court fell into the same error as the Assistant Commissioner as it accepted his findings on the ground that they were on questions of fact and could not be re-examined by the High Court. It was said that the terms and covenants of the contract made it clear that since the vehicles were despatched in pursuance of orders irrespective of appropriation or specific vehicles being sent to specific dealers the dispatch and supply to the dealers must of necessity be regarded as integral part of a single transaction. It is difficult to see what contracts the High Court had in mind because none have been shown to us even by the learned Advocate-General for the State. He also relied largely on the findings of the Assistant Commissioner and urged that they were not open to re-examination.11. The explanation of the procedure followed by the appellant which prima facie seems to be business-like and plausible together with the proved absence of any firm orders lends support to the argument pressed on its behalf that the allocation letters and the statements furnished by the dealers did not by themselves bring about transactions of sale within the meaning of Section 2 (g) of the Act.The Assistant Commissioner himself found that sometimes the vehicles were sent from the works at Jamshedpur even before an allocation letter had been issued. It would appear from the material placed before us that generally the completion of the sales to the dealers did not take place at Jamshedpur and the final steps in the matter of such completion were taken at the stockyards. Even if the appellant took into account the requirements of the dealers which it naturally was expected to do when the vehicles were moved from the works to the stockyards it was not necessary that the number of vehicles allocated to the dealer should necessarily be delivered to him. The appropriation of the vehicles was done at the stockyards through specification of the engine and the chassis number and it was open to the appellant till then to allot any vehicle to any purchaser and to transfer the vehicles from one stockyards to another.Even the Assistant Commissioner found that on some occasion vehicles had been moved from stockyards in one State to a stockyard in another State. It is not possible to comprehend how in the above situation it could be held that the movement of the vehicles from the works to the stockyards was occasioned by any covenant or incident of the contract of sale. As regards the so-called firm orders it has already been pointed out that none have been shown to have existed in respect of the relevant periods of assessment. Even on the assumption that any such orders had been received by the appellant they could not be regarded as anything but mere offers in view of the specific terms in Exht. I (the dealership agreement) according to which it was open to the appellate to supply or not to supply the dealer with any vehicle in response to such order. What was, therefore, relevant was the acceptance of firm orders occasioning the movement of vehicles out of the State of Bihar.12. Another serious infirmity in the order of the Assistant Commissioner was (a matter which even the Advocate-General quite fairly had to concede) that instead of looking into each transaction in order to find out whether a completed contract of sale had taken place which could be brought to tax only if the movement of vehicles from Jamshedpur had been occasioned under a covenant or incident of that contract the Assistant Commissioner based his order on mere generalities. It has been suggested that all the transactions were of similar nature andthe appellants representative had himself submitted that a specimen transaction alone need be examined. In our judgment this was a wholly a wrong procedure to follow and the Assistant Commissioner, on whom the duty lay of assessing the tax in accordance with law, was bound to examine each individual transaction and then decide whether it constituted an inter-State sale exigible to tax under the provisions of the Act.