M/S. Hyderabad Engineering Industries vs State Of A.P

3. M/s Jay Engineering Works Ltd. is a Public Limited Company, registered under the Companies Act, 1956. It has its Head Office- cum-Registered Office at 23, Kasturba Gandhi Marg, New Delhi. In the State of Andhra Pradesh, the Company has registered itself in the name and style of M/s Hyderabad Engineering Industries (Prop. - The Jay Engineering Works Ltd.). It is registered as a dealer under the Andhra Pradesh General Sales Tax Act, 1957 as well as Central Sales Tax Act, 1956.

5. M/s. Usha Sales Ltd. (subsequently known as Usha International Ltd.) (hereinafter referred to as "UIL") is a company registered under the Indian Companies Act, with its registered office at 19, Kasturba Gandhi Marg, New Delhi. It has 16 divisional offices at various places in the country with different names at every place wherever the assessee's godowns are located. The assessee and UIL had entered into a sales agreement dated 01.05.1979. It was for a period of five years. Under the said agreement, the main function of UIL was to organize the sale and distribution of the products of the assessee and to arrange for sale promotion measures of the products and to provide after sales service and such other services as might be required in the interest of sale of the said products. The agreement also envisaged that UIL would purchase the said products as an independent principal and maintain adequate stocks and sell the same as such. We will refer to these clauses in the agreement while discussing the issues 3 raised by the learned counsel for the parties at the time of hearing of the appeal.

6. The Company has been an assessee on the rolls of the Commercial Tax Officer, Company Circle-II, Nampalli, Hyderabad. For the assessment year 1981-82, the assessee company filed its annual returns under the Central Act in the prescribed form.

The prices at which Usha Sales shall sell the agreement products to their agents/dealers shall be determined by them so however that Usha sales make up on their purchases price shall not exceed:-

Sewing Machines/Accessories 10.00 Rs. 5/- (per top) Fans 7.35% Component parts 13.35% The price so computed shall be maximum price and Usha sales shall be free to sell at prices lower than the said maximum.

a) Payment for all purchases shall be made to JE within 75 days of the date of the bill failing which Usha sales shall pay interest at JE's Maximum borrowing rates from their bankers at that time.

Sales Deliveries Sales/deliveries shall be made to Usha Sales their nominees at any of JE's factories region godowns at the company's option."

34. We now turn to the facts of the present case to determine whether the transaction in question is inter-State trade or commerce or mere stock transfers to branch offices.

38. In pursuance to the sales agreement, UIL placed monthly indents on the assessee with instructions to dispatch the goods of given size and quantity to the named destination. Pursuance to such indents, the assessee dispatched the goods to its godowns to the given destination and sent goods dispatch intimation directly to the concerned UIL divisional office at the destination furnishing size and quantity dispatched with L.R.No. and name of the transport company. The statutory authorities, from the correspondence between UIL and the assessee noticed in their order that UIL divisional offices correspondent directly with the assessee for the supply of stocks and also informs them about the receipt or non-receipt of the stocks. The assessee, on receipt of the request for supply of goods dispatches the same to its state godowns and the person-in-charge of the godowns to the UIL division office by raising sales invoice.

46. As a result of our above discussion, we do not find any merit in this appeal and the same is accordingly dismissed. No order as to costs.