1. M/s. Hemalatha Textiles Limited is an incorporated company. Its registered office is in Madras City. But the textile mill, the running of which was one of its objects, was located in Pedakkani in Guntur District of the State of Andhra Pradesh. In 1970-71, the assessee-company entered into a contract with a firm of exporters in Madras called Indo-Burma Trading Corporation, for the sale of 1,000 bales of cotton yarn of the aggregate value of Rs. 7,87,508. The price fixed was f.o.b. Madras. Both the parties knew that this transaction in yarn was for the purpose of export to Burma.
2. When the Exemption was claimed by the assessee it was claimed on the footing that this sales turnover represented sales in the course of export outside the territory of India.
3. The assessee claimed in its relevant sales tax assessment that this sale to the Indo-Burma Corporation was not a sale within the State and cannot be brought to charge under the Tamil Nadu General Sales Tax Act, 1959. The assessee contended that this was a sale in the course of export and hence exempt from sales tax.
4. This contention was rejected uniformly by all the sales tax authorities, right from the assessing officer to the Appellate Tribunal. All of them took the view that the sale became complete within the country and it was after the completion of the sale that the export movement began as a separate operation.
5. In this revision by the assessee, the ground taken was that the sale was in the course of export. At the final hearing, however, Mr. Natarajan, the assessee's learned counsel, made little or no attempt to reiterate this line of argument. He raised, instead, an alternative contention, namely, that the sale to Indo-Burma Corporation must be regarded as a sale by the assessee in the course of inter-State trade. This contention had been put forward by the assessee in the appeal before the Tribunal, but was rejected. After an elaborate discussion of the facts, the Tribunal observed that none of the ingredients of an inter-State sale was present in this transaction.
6. The learned counsel for the assessee, however, pressed for the examination of the Tribunal's conclusion, drawing attention to certain facts, which according to him showed the inter-State character of the sale. The facts relied on by Mr. Natarajan were as follows :
The assessee has its registered office in Tamil Nadu State. The contract of sale was concluded by the assessee with Indo-Burma Corporation in Madras. But the assessee's manufacturing unit which produces yarn was situated in the State of Andhra Pradesh. The sale was f.o.b. Madras. The 1,000 bales of yarn came to be manufactured in the assessee's mill in Andhra only after the contract of sale was concluded between the parties, and the order was placed. In any case, the goods were appropriated to the contract from out of the stock of yarn in the mill premises in Andhra Pradesh. The assessee had to apply to the Central excise authorities for permits to move these bales of yarn to Madras. The applications made in statutory forms also contained, on their face, orders of release passed by the excise authorities in Andhra Pradesh. After the goods were moved from the factory in pursuance of these release orders, and brought to Madras, the assessee delivered them over to the clearing agents for being shipped to Burma.
7. With this narration of facts, Mr. Natarajan urged that the prime mover which occasioned the movement of the 1,000 bales of yarn from Andhra Pradesh to Madras Port was the sale by the assessee to the Indo-Burma Corporation. He accordingly submitted that the sale in question cannot be brought to charge under the Tamil Nadu General Sales Tax Act, 1959.
8. Most of the facts narrated by the assessee's learned counsel are not seriously in dispute. Some crucial facts, however, have been found against the assessee. We, therefore, proceed to summarise the findings in the case. To start with, the Tribunal did not accept the assessee's plea that the yarn was freshly manufactured at the assessee's mill in Andhra pursuant to the order placed by Indo-Burma. The Tribunal further observed that it was not established that at the time of the contract there was a condition that the assessee should appropriate the goods to the contract from the mill premises in Andhra. The sale of yarn was f.o.b. Madras, but it did not stipulate that the yarn should be supplied from any particular place. According to the Tribunal, the parties did not contemplate the movement of goods from Andhra Pradesh to this State, as part of the bargain. Above all, the Tribunal did not find any evidence whatever to support the assessee's claim that the 1,000 bales of yarn were actually moved from the mills in Andhra Pradesh and transported to Madras. The assessee did not produce its stock register maintained in its mill at Padakkani, which, if perused, would have shown whether or not the 1,000 bales relating to this contract were taken from the stock kept at the mill premises. The assessee did not also produce the stock register maintained by the assessee in its sales office at Madras, which would have shown that the 1,000 bales were not delivered from the stock kept at Madras, by the sheer absence of any entries in that register having relevance to this transaction. Nor was any inter-branch correspondence in the assessee's organisation produced to establish the appropriation to the contract at the Padakkani factory and the transport of the yarn bales to madras by some means of communication.
9. Having regard to the factual considerations aforesaid, the Tribunal concluded that the sale could not be exempted from assessment under the Tamil Nadu General Sales Tax Act as an inter-State Sale.
10. Section 3 of the Central Sales Tax Act, 1956, lays down when a sale of goods is said to take place in the course of inter-State trade or commerce. It lays down two sets of circumstances in which a sale could be so regarded. The assessee's contention bears on the first of the two statutory tests. According to the section, if a sale occasions the movement of goods from one State of India to another, then that sale must be held to be a sale in the course of inter-State trade. Two things, then, are necessary to make a sale an inter-State sale. One is that there should be a physical movement of the goods sold from one State to another.
11. The other is that the very causation for that movement must be the sale of the goods. In the present case, the Tribunal has recorded a finding, after discussing the evidence in the case, that the 1,000 bales of yarn which were thm subject of the sale by the assessee to Indo-Burma Corporation did not move from Andhra Pradesh into Tamil Nadu. This finding is a finding of facts and it puts a seal on any further arguments based on section 3 of the Central Sales Tax Act.
12. It is true that the sale was f.o.b. Madras. But that does not, by itself, conclude or even indicate, whether the goods moved from Andhra to Madras. It is not denied that the assessee has a sales office at Madras. So, the assessee might well have effected delivery from its sales office at Madras, particularly when there is nothing to show that even at the time of the contract of sale the stipulation as to appropriation was otherwise. The contract is said to be oral, but there is no further evidence to show that the goods were required under the terms of the contract, to be sent from the mill godown at Andhra. Whether the appropriation of the yarn was to be from the Andhra factory or from the Madras godown could only be shown by recorded evidence available in the assessee's own stock books, correspondence, lorry-way bills, railway receipts and the like. The assessee has failed to produce evidence of this kind. The Tribunal was, therefore, not called upon to draw the inference which the assessee invited the Tribunal to draw in its favour, 'f.o.b. Madras' only shows that the price was fixed with the idea of delivery at Madras. It does not show that this condition in the sale contract also contained the further stipulation that the goods should not be appropriated from the assessee's Madras office.
13. The assessee's learned counsel urged that the Tribunal did not give due importance to the order of release made by the excise authorities in Andhra Pradesh for releasing the 1,000 bales of yarn from the factory. He urged that these orders are official records, and must be accepted as crucial evidence of the movement of goods, or at least, of the preliminary stages of the movement of the goods, from Andhra Pradesh to Madras.
14. In hearing a revision from the orders of the Tribunal, we ought not be drawing factual inferences ourselves. The Tribunal had had ample opportunity of considering the entire documentary evidence in the case, including the applications for release of goods from Guntur and the orders passed by the Central excise authorities on such applications. If, despite this documentary evidence, the Tribunal had rendered a categorical finding that there was no evidence to show that the goods had actually been moved from Andhra Pradesh to Madras pursuant to the contract, it is no reflection against the truth of the official documents, but it only shows that despite the release orders the necessary link of actual, physical, trans-State movement of the goods from the mill premises to Madras with particular reference to this sale contract had not been established by the assessee to the satisfaction of the Tribunal. We do not think that the Tribunal had altogether ignored the aspects of documentary evidence produced by the assessee relating to the grant of excise permits. Indeed, it appears from the Tribunal's order that in their view, the release asked for by the assessee from the Central excise authorities might well have been utilised for replenishing the stock in the assessee's sales office at Madras, without reference to, and subsequent to the appropriation to the contract of the goods already in stock in the Madras sales office. We cannot, therefore, say that the Tribunal had not taken a reasonable view of the facts when they held that the sale was a local sale at Madras when both the parties were at Madras; when the contract was concluded at Madras; when the sale was f.o.b. Madras; when the assessee had a sales godown at Madras; and when the assessee did not produce any lorry receipt or railway receipt or correspondence or stock registers to prove that the goods had travelled from the mill in Andhra Pradesh to Madras Port in pursuance of this transaction. We accordingly, uphold the Tribunal's determination that the turnover of Rs. 7,87,508 represented a local sale properly chargeable to tax under the Tamil Nadu General Sales Tax Act, 1959.
15. The revision is accordingly dismissed. Since the assessee has failed, it will pay the costs to the Government. Counsel's fee Rs. 250.