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The Hindustan Teleprinters Ltd. Vs. the Joint Commercial Tax Officer, Guindy Division - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case Number Writ Petition Nos. 1743 of 1968 and 12 of 1969
Judge
Reported in[1973]30STC431(Mad)
AppellantThe Hindustan Teleprinters Ltd.
RespondentThe Joint Commercial Tax Officer, Guindy Division
Appellant Advocate C.S. Chandrasekhara Sastry, Adv. for ;K.K. Venugopal, ;Anand, ;Dasgupta, ;Sagar and ; V. Eapen Verghese, Advs.
Respondent Advocate K. Venkataswami, the First Assistant Government Pleader
DispositionPetition allowed
Cases ReferredEnglish Electric Company of India Ltd. v. Deputy Commercial Tax Officer
Excerpt:
- - 8. i am therefore satisfied that the jurisdiction assumed by the respondent under section 16 of the madras general sales tax act, 1959, is not warranted in the instant case. but, i am, however, satisfied that the sales in question undoubtedly are sales in the course of inter-state trade or commerce and cannot be dealt with as intra-state sales......the seller and the buyer, such sales, despatches and deliveries made should be deemed to be inter-state sales and, therefore, they were properly dealt with and assessed by the appropriate authorities in their original orders of assessment dated 18th november, 1963, and 31st december, 1964. on this ground, the jurisdiction of the officer to reopen the assessments under section 16 of the madras general sales tax act is challenged.3. amongst other grounds raised, impugning the orders of assessment passed under section 16 of the madras general sales tax act, it is said s that there was no sufficient ground or acceptable reason to reopen the same under section 16, as every possible and available material for purposes of assessment was made available by the assessees to the original authority.....
Judgment:

Ramaprasada Rao, J.

1. In these two writ petitions, the Hindustan Teleprinters Limited, Industrial Estate, Guindy, are the petitioners. For the years 1962-63 and 1963-64, the petitioners were assessed to local tax under the Madras General Sales Tax Act, 1959, as also to Central sales tax under the Central Sales Tax Act, 1956. The orders of assessment under the relevant Acts for the year 1962-63 were made on 18th November, 1963. Similarly for the year 1963-64, the orders were made by the appropriate authorities on 31st December, 1964. Both the assessments arose out of business and commercial dealings of the petitioners which are to be traced to a contract which I shall presently refer to. Some time thereafter, the respondents purporting to act under Section 16 of the Madras General Sales Tax Act, sought to reopen the assessments made for the years 1962-63 and 1963-64 under the Central Sales Tax Act, 1956, as if those assessments ought to have been done under the Madras General Sales Tax Act, as according to the respondent, the transactions covered by those assessment orders made for the relevant years as above, were wrongly assessed under the Central Sales Tax Act, and as the transactions reflected in those orders of assessment were essentially intra-State in character and not inter-State dealings. On the assumption that the earlier orders under the Central Sales Tax Act were improper, the assessments were reopened under Section 16 of the Madras General Sales Tax Act and final orders were passed for the year 1962-63 on 30th March, 1968, and for the year 1963-64 on 15th March, 1969. These two orders are challenged in these two writ petitions.

2. Amongst various grounds of attack, the orders are also challenged on the ground that the transactions as are evidenced by the contract entered into between the petitioners-assessees-sellers and the person to whom deliveries were made pursuant to the contract are all transactions which undoubtedly disclosed a movement of goods pursuant to the same from one State to the other. Consequent upon such a movement of goods as a result of the contract between the seller and the buyer, such sales, despatches and deliveries made should be deemed to be inter-State sales and, therefore, they were properly dealt with and assessed by the appropriate authorities in their original orders of assessment dated 18th November, 1963, and 31st December, 1964. On this ground, the jurisdiction of the officer to reopen the assessments under Section 16 of the Madras General Sales Tax Act is challenged.

3. Amongst other grounds raised, impugning the orders of assessment passed under Section 16 of the Madras General Sales Tax Act, it is said s that there was no sufficient ground or acceptable reason to reopen the same under Section 16, as every possible and available material for purposes of assessment was made available by the assessees to the original authority and there being no laches on the part of the assessees, no question in anywise whatsoever of reopening of a closed assessment on the foot that there has been an escapement in the matter of the quantum of tax or otherwise is warranted in law. It is not necessary for me to consider this latter contention, in the view I intend taking.

4. Under the contract between the parties, which has been obviously entered into between the Chief Controller of Telegraph Stores, Calcutta, and the petitioners, there is a schedule which indicates as to what part the petitioners should play, while implementing the terms of the contract. One such term which is expressly referred to in the schedule to the contract is that in the matter of despatches of goods contracted for by the Chief Controller of Telegraph Stores, Calcutta, for being supplied to the Controllers of Stores at stations other than Madras, the Controller of Telegraph Stores, Madras, should test, accept and seal the goods before the petitioners despatch the contracted goods to the respective consignees outside the State. Incidentally, it may be stated that under the contract, the petitioners accepted to move the various types of goods for being supplied to the Controllers of Stores, Calcutta, Bombay, Jubbulpore and New Delhi. Of course, the contract also envisaged supply of such goods or similar goods to the Controller of Stores at Madras. It is common ground that in so far as such supplies made by the petitioners to the Controller of Telegraph Stores, Madras, are concerned, they were treated as intra-State sales and subjected to the levy of sales tax under the local law. The question which, however, has arisen in the instant case is, whether by reason of the part played by the Controller of Telegraph Stores, Madras, in the matter of testing, accepting and sealing the goods, before they are despatched by the petitioners to the consignees outside the State, but pursuant to the contract the transactions should be deemed to be sales effected within the State of Tamil Nadu and, therefore, liable to be taxed under the Tamil Nadu General Sales Tax Act, 1959.

5. The original authority, which dealt with the material placed before it, rightly in my view, came to the conclusion that a part of the turnover of the assessees, namely, the transactions in respect of which the goods were despatched from the State of Tamil Nadu to States outside it, pursuant to the contract entered into between the Chief Controller of Telegraph Stores, Calcutta, and the petitioners constituted inter-State sales which would attract levy of sales tax under the Central Sales Tax Act of 1956. Curiously enough, the respondent purporting to act under Section 16 of the Madras General Sales Tax Act, which enables him to reopen a closed assessment 'for any reason' has chosen to reopen the same on the ground that the transactions in question and particularly the sales effected by the petitioners to out of the State Controllers of Stores should be deemed to be intra-State sales. The reasoning of the respondent is that as the goods were accepted or rejected, as the case may be, by the Controller of Stores at Madras, any movement of the goods thereafter, even though at the instance of the assessees or at their behest, should be deemed to be one which was made by the Controller of Stores at Madras'. He would conclude that the transfer of property in the goods was completed at Madras, but at the same time would add that such transfer of property was to the consignees whose representative was stationed at Madras. Obviously, the authority has treated the Controller of Stores, Madras, as a representative of the Controllers of Stores, Bombay, Calcutta, Jubbulpore and New Delhi. Nowhere does the contract assign such a duty to the Controller of Stores, Madras. What happened in this case is, the Chief Controller of Telegraph Stores, Calcutta, who is apparently the Head of the Department of the Telegraph Stores, conscious of the fact that the stores are being purchased at Madras, for the benefit of other Controllers outside the State of Madras, has requested the Controller of Stores at Madras to inspect the goods, so that by such a check and supervision, the normal rejections and return which ordinarily flow from a contract of supply of goods creating practical difficulties besides complications in the matter, might not happen. This is a step taken or instruction given by way of guidance, by the Chief Controller of Telegraph Stores, Calcutta, to the Controller of Stores, Madras, to ensure that goods are treated, accepted and sealed by him. It means nothing more than that the Controller of Stores at Madras is just supervising the quality of the goods and as far as possible ensuring that the goods which are accepted generally by the department are being despatched by the assessees as manufacturers thereof. In fact, this cannot be deemed to be a term of the contract which has an impact on tax liability. The Controller at Madras is constituted as an intermediary for a particular purpose which has no relation to the contract of sale of the goods, which is primarily the result of negotiations between the Chief Controller of Telegraph Stores, Calcutta, and the assessees. Further, with reference to this contract, specific despatch instructions were issued by the Chief Controller of Telegraph Stores, Calcutta, which clinch as it were the real intention of the parties. Under the despatch instructions, the Chief Controller at Calcutta has made it clear that the various goods mentioned therein and for which contracts have been entered into are to be despatched to the various stations such as Calcutta, Bombay, Jubbulpore and New Delhi and such movement are understood to be in pursuance of the contracts already entered into.

6. In an identical situation, this court in English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1969] 23 S.T.C. 32, made the following observations :

But the incidents intricately woven with the movement of goods may suggest that the seller knew the buyer and the goods moved for satisfying a contract with the buyer and but for the identified and identifiable buyer there would have been no occasion for the ascertained goods to move at all.... If there is a conceivable link between the movement and the buyer's contract, and if in the course of inter-State movement the goods move only to reach the buyer in satisfaction of his contract of purchase and such a nexus as above is otherwise inexplicable, then the sale or purchase of the specific or ascertained goods ought to be deemed to have taken place in the course of inter-State trade or commerce as such a sale or purchase occasioned the movement of the goods from one State to another.

7. In the instant case, the revenue is unable to explain as to why the goods moved from this State to another unless it be pursuant to the contract entered into between the Chief Controller of Stores, Calcutta, and the petitioners as sellers.

8. I am therefore satisfied that the jurisdiction assumed by the respondent under Section 16 of the Madras General Sales Tax Act, 1959, is not warranted in the instant case. I am not considering in the instant case, whether there was any reason for reopening the closed assessment or not, as I have already said that it is not necessary to do so. But, I am, however, satisfied that the sales in question undoubtedly are sales in the course of inter-State trade or commerce and cannot be dealt with as intra-State sales. In fact, the original authority, when it assessed the assessees for the years in question on 18th November, 1963, and 31st December, 1964, respectively, rightly assessed the transactions under the Central Sales Tax Act.

9. For the reasons stated above, the rules nisi are made absolute and the writ petitions are allowed. There will be no order as to costs.


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