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

2. The appellant carries on the business of manufacturing inter alia Tata Mercedes Benz trucks and buses, chassis, spare parts and accessories thereof at Jamshedpur in the State of Bihar. These are sold to the Government of India, the State Transport Corporations, Commercial and Industrial undertakings and other persons. These appeals relate to the assessments made y the Assistant Commissioner of Commercial Taxes, hereinafter called the "Assistant Commissioner", with regard to the assessment periods April 1, 1964 to March 31, 1965 and April 1, 1965 to March 31, 1966. As the points are common to both the appeals we shall deal with the facts relating to the second period, namely, April 1, 1965 to March 31, 1966.3. The appellant did not maintain any stockyard in the State of Bihar but in different States stockyards were being maintained since December 1964. This, it is stated, was done for the purpose of more effective distribution of the vehicles particularly among the network of dealers. These stockyards were operated by the appellants own personnel and the sales of the vehicles, it is claimed, were effected to the dealers as well as to the other users in the different States from the stockyards. The dispute relates only to the assessment made in respect of the vehicles, which moved from the manufacturing plant in Jamshedpur to the stock-yards in different State in the country. The sales tax was duly paid in accordance with the respective State laws on the sales effected from the stockyards there.4. The Assistant commissioner has levied tax under the Act on all the vehicles, which move to the stockyards in States other than Bihar from Jamshedpur. Tax amounting to Rs. 173 lakhs was levied on April 1, 1966 for the period April 1, 1965 to September 30, 1965. The appellant moved the Patna High Court under Article 226 of the Constitution in April 1966 challenging the order of assessment but the petition was dismissed in limine in April 1966. This Court was thereafter approached against the order of the High Court and special leave to appeal was granted. The appeal was finally allowed in February 1967 and the High Court was directed to entertain and decide the petition on merits. In November 1967 an agreed order was made by which the previous order of assessment was set aside and fresh assessment was to be made in accordance with law. On January 24, 1968 the appellant addressed a detailed communication giving the entire procedure which was being followed in the matter of sales of motor vehicles sent to different States from the works at Jamshedpur. It appears that the Assistant Commissioner paid a personal visit to the head office of the appellant at Bombay and relevant records were shown to him there or later on according to his requisitions. On March 13, 1968 he made the assessment order in which he created a demand for Rs. 2,79,13,599.32 by way of Sales Tax under the provisions of the Act on the vehicles which had moved from Jamshedpur to the stockyard in the various States and had been disposed of from there. The appellant filed petitions under Article 226 f the Constitution challenging the above order as also the assessment on similar lines for the period April 1, 1964 to March 31, 1965. The petitions were dismissed by a Division Bench of the High Court.

Reasoning:
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.