Case: M/S. I.D.L. Chemical Ltd Vs. State Of Orissa

Brief facts which are necessary for disposal of this appeal are that the assessment under the Central Sales Tax Act, 1956 for the years 1976-77, 1977-78 to 1983-84, 1989-90 and 1990-91 was made in respect of assessee, M/s. IDL Industries ( formerly IDL Chemicals Ltd.), a company under the Indian Companies Act having its registered office at Kukatpalli, Andhra Pradesh engaged in manufacturing explosive, detonators and accessories and holding licence under the Explosive Act, 1984. It has a manufacturing unit at Sonaparbet near Rourkela in Orissa which is also registered under both Orissa Sales Tax Act, 1947 and the Central Sales Tax Act, 1956 with the Sales Tax Officer, Rourkela I Circle, Rourkela. M/s. IDL Chemicals Ltd is a regular supplier of its products to different Government undertakings such as the Coal India Limited (hereinafter to be referred to as CIL), National Mineral Development Corporation, Hindustan Zinc Limited etc. and supplies to these undertakings constituted almost 90 per cent of its total production. CIL placed orders on the appellant for supply of explosive, detonators, accessories etc. for its collieries inside and outside the State of Orissa with a stipulation that delivery should be made against the indent placed by the collieries. The appellant has its consignment agent at different places outside the State. During the assessment years in question the appellant effected supplies through its consignment agents against indents placed by the collieries and for this purpose it claimed to have dispatched the goods to its consignment agents on stock transfer basis otherwise than by way of sale. The contention of the appellant was that dispatches from its factory at Rourkela were stock transfers and were not liable to be assessed to tax under the Central Sales Tax Act as the sales took place when the supplies were made to the collieries against the indents placed by them with their consignment agents. It may be relevant to mention here that the appellant has its consignment agents in various States like Madhya Pradesh, Bihar, West Bengal and Maharashtra. All the goods were sent to their consignment agents and from there those goods were dispatched to various collieries of CIL. Therefore, it was not inter-State sale. As against this, it was contended on behalf of the State before the High Court that the supplies were made on account of the order placed by CIL and the movement of the goods from the State of Orissa to outside States was incident of the CILs order for supply. The transactions were purely inter-State sale from the State of Orissa, as the appellant would not have dispatched the goods outside the State for delivery to the collieries, had there been no order of CIL. It was also contended on behalf of the State that the indents were not contract of sale and that the indents placed by the collieries were simple follow up action of the purchase order of CIL datedneed not refer to various orders that were placed from time to time by the CIL or otherwise. This matter was taken up by way of reference by the High Court and the following questions of law wereThat in view of the quotation offered by the assessee company and supply order issued by M/s.CIL indicating the firm order of rate of payment, quality to be purchased, period of contract etc. on acceptance of the offer, whether the Sales Tax Tribunal was correct in law to hold that it was not the contract of sale but the actual purchase and sale was triggered only when a colliery placed indent with M/s.IDL Chemicals?(2) That in view of the fact that M/s.IDL Chemicals moved goods in pursuance to the supply order placed by M/s. CIL, whether the Sales Tax Tribunal was correct in law to hold that the transactions do not constitute sale falling U/s. 3(a) of the C.S.T. Act ?(3)That in view of the fact that the indents placed by the constituents of M/s.IDL was mere indents to take delivery of the goods, whether the Sales Tax Tribunal as correct to hold that the actual sales were triggered by such indents and taken place inside the respective State and were intra-State sale subject to levy of tax under the of that State ?"

Court's reasoning:
It is not necessary to go into all these facts as we have already held above on factual aspect that the goods which were triggered from Rourkela and sold to the subsidiaries of the CIL through the appellants consignment agents were essentially meant to be sold to the subsidiaries of the CIL and the goods primarily triggered from Rourkela and were sent to the subsidiaries of the CIL amounted to inter-State sale and the view taken by the Division Bench of the Orissa High Court iswe part with this case we may observe that the authorities will go into the factual aspects and find out how much of the quantity of the goods were sent to other undertakings other than the subsidiaries of CIL and assess tax on the supplies which were made to the subsidiaries of CIL as inter-State sale.