(Order of the Court was made by P.P.S.JANARTHANA RAJA, J.) The Writ Petition is filed for the issuance of writ of certiorari to call for the records on the file of the second respondent pertaining to the order dated 28.03.2003 made in T.C.A.No.141 of 1999 and quash the same as illegal.
2. The brief facts are as follows:
The assessee/first respondent is a public limited company, which is engaged in the business of manufacture and sale of papers. They are dealers in newsprint and assessed on the file of the Deputy Commercial Tax Officer, Ambasamudram, in TNGST 802529/93-94. The relevant assessment year is 1993-1994. The assessee has effected sales of newsprint to the tune of Rs. 25,07,671/- during the assessment year to Tvl. Kerala Sabdam and Tvl. Kollam Muthari, Kollam and claimed that those sales as inter-state sales. But the assessing Officer rejected their claim on the ground that the newsprints sold to them were not moved to other State. They were moved only to Sivakasi and later the said newsprints were converted into news magazine in Pioneer Press (P) Limited, Sivakasi and then the same were moved to Kerala. Therefore, the assessing Officer assessed the said turn over under the Tamil Nadu General Sales Tax Act, 1959. Aggrieved by that order, the assessee has filed an appeal before the Appellate Assistant Commissioner(CT), Tirunelveli in CST AP No.345/95. The Commissioner allowed the appeal on the ground that the movement of goods from the State of Tamil Nadu to Kerala would certainly form an inter-state transaction. Later, the Joint Commissioner (CT)(SMR) suo motu revised the order of the Appellate Assistant Commissioner and treated the transaction as local sales and held as follows:
"Looking at the above circumstances, it is found that the goods moved from the assesee to Sivakasi as a result of the sale. What happened later is that the concern of the assessee had no connection what so ever after the dispatch of paper to given basis. What moved out of the state were only news magazines and not news print with which the assessee is concerned. Therefore, the sales would fall under the local Act,s purview and the order of the Appellate Assistant Commissioner is not proper, therefore, liable to be set aside. Appellate Assistant Commissioner's order is set aside and the Assessing Officer's order is restored."
Aggrieved by that order, the assessee has filed the appeal before the Tamil Nadu Taxation Special Tribunal, Chennai, in T.C.A.No.141 of 1999. The Tribunal, by its order dated 28.03.2003, while allowing the appeal, held that all the sale transaction would fall within the ambit of
Section 3(a) of the Central Sales Tax Act, 1956 and therefore, they are inter-state sales, which do not attract the provisions of the Tamil Nadu General Sales Tax Act, 1959 or Kerala General Sales Tax Act, 1963. Aggrieved by that order, the Revenue has filed the present writ petition to quash the order passed by the second respondent/Tribunal.
3. The learned Special Government Pleader appearing for the revenue submitted that the newsprint were despatched to Sivakasi by the assessee. Even though the destinations were mentioned as Calicut Trivandrum, Tiruchur and other places in Kerala, in the bills, admittedly, the news prints were despatched to Sivakasi by the assessee as per the instruction of the purchasers from Kerala. So there is no inter-state sale. Thereafter only the goods were transferred from Sivakasi to Kerala. It is further contended that the goods were unloaded and after printing, the magazines were despatched by the printers from Sivakasi to Kerala. Therefore, the transaction is nothing but local sales when the goods were delivered to the printer at Sivakasi, the agent of the buyers. He further contended that the sale was actually concluded within the State of Tamil Nadu by delivery of the goods to the buyers agent within the State itself and the buyer or their agents transported the goods thereafter to Kerala. Therefore, such a movement to the other State will not amount to an inter-state sales as the sale cannot be said to have occasioned the movement and relied on various judgments of Apex Court in support of his contention reported in (1981) 48 STC 232(SOUTH INDIA VISCOSE LTD., VS. STATE OF TAMIL NADU), (1979) 43 STC 457 (UNION OF INDIA AND ANOTHER VS. K.G.KHOSLA AND CO. LTD., AND OTHERS), (1988) 70 STC 45 (COMMISSIONER OF SALES TAX, U.P., LUCKNOW VS. SURESH CHAND JAIN), (2007) 7 VST 214(STATE OF ORISSA AND ANOTHER VS. K.B.SAHA AND SONS INDUSTRIES PVT. LTD., AND OTHERS) and (2009) 19 VST 239 (A & G PROJECTS AND TECHNOLOGIES LTD. VS. STATE OF KARNATAKA). He also submitted that the order passed by the Tribunal is not in accordance with law and the same has to be set aside.
4. The learned counsel appearing for the assessee submitted that the present writ petition is filed belatedly and the same has to be dismissed on the ground of laches and delay. The second respondent/Tamil Nadu Taxation Special Tribunal has passed an order on 28.03.2003 in T.C.A.No.141 of 1999 and the same was served on the petitioner on 07.04.2003. But the writ petition was filed only on 04.01.2005 i.e. after a period of 20 months and hence, the writ petition was filed belatedly without any reasonable cause and the assessing officer also passed consequential order giving effect to the Tamil Nadu Taxation Special Tribunal's order on 25.06.2003. Further, the learned counsel for the assessee has contended that there is a movement of goods from one State to another and there is no dispute regarding the same. He further submitted that the news prints were despatched to Sivakasi en-route kerala and hence, it is an inter-state sale. What is required is "movement of goods from one State to another" and there is no dispute regarding the agreement entered with the Kerala customer occasioned the movement of the goods. There is no agent in Tamil Nadu for the purpose of taking delivery. He further submitted that merely because the goods undergo a commercial change, it will not alter the nature of the transaction, viz., inter-state sale and prayed this Court to dismiss the writ petition on the ground of laches and delay as well as the merits of the case.
5. Heard the learned counsel on either side and perused the materials on record.
6. The points that have arisen for consideration are:-
7. In respect of delay, it is seen from the records that the second respondent/Tribunal has passed the impugned order on 28.03.2003. The said order was received by the assessee on 04.04.2003 and the same was served on the petitioner on 07.04.2003. Later, the assessment records were forwarded to the Commissioner of Commercial Taxes on 06.11.2003. Then the said papers were circulated for getting legal opinion on 22.01.2004 and only on receipt of the opinion, the necessary papers were made ready and later, the writ petition was filed. In this case, the writ petition is filed on 04.01.2005. There is no explanation offered in the affidavit for the delay from 22.01.2004 to 04.01.2005 and also it is seen that after receipt of the order, the petitioner took seven months time to forward the same to the Commissioner of Commercial Taxes i.e . on 06.11.2003. Later it was circulated to get the legal opinion on 22.01.2004. The Commercial Tax Officer, after a period of two months, sent the papers for legal opinion on 22.01.2004. Each and every stage, there was an enormous delay. In paragraph 5 of the affidavit filed in support of the above writ petition, no proper explanation shown for the delay of 20 months. No sufficient cause or explanation offered for the delay of 20 months. The delay is inordinate one. Recently, in the case of M/S CITY INDUSTRIAL DEVELOPMENT CORPOATION VS DOSU AARDESHIR BHIWANDIWALA AND OTHERS reported in (2009) 1 CTC 174 wherein the Supreme Court has considered the delay in filing the writ petition and held as follows:
"19. It is well settled and needs no restatement at our hands that under
Article 226 of the Constitution, the jurisdiction of a High Court to issue appropriate writs particularly a Writ of Mandamus is highly discretionary.` The relief cannot be claimed as of right. One of the grounds for refusing relief is that the person approaching the High Court is guilty of unexplained delay and the laches. Inordinate delay in moving the Court for a Writ is an adequate ground for refusing a Writ. The principle is that Courts exercising public law jurisdiction do not encourage agitation of stale claims and exhuming matters where the rights of third parties may have accrued in the interregnum."
8. In the case of M/S SINGH ENTERPRISES VS. COMMISSIONER OF CENTRAL EXCISE JAMSHEDPUR AND OTHERS reported in 2008 AIR SCW 1461, the Supreme Court considered the delay of 20 months in filing the appeal and held as follows:
"2.Challenge in this appeal is to the order passed by a Division Bench of the Jharkhand High Court dismissing the Writ Petition filed by the appellant. Before the High Court appellant had challenged the order passed by the Commissioner (Appeals), Central Excise and Service Tax, Ranchi dismissing the appeal filed by the appellant under
Section 35 of the Central Excise Act, 1944 (in short the Act). The said order was challenged before the High Court by filing a Writ Petition. The Commissioner had dismissed the appeal only on the ground that it was filed after 21 months of the date of service of the original order and the appellate authority did not have power to condone the delay beyond the period of 30 days from the date of expiry of period of 60 days prescribed for filing the statutory appeal.
10. Sufficient cause is an expression which is found in various statutes. It essentially means as adequate or enough. There cannot be any strait jacket formula for accepting or rejecting the explanation furnished for delay caused in taking steps. In the instant case, the explanation offered for the abnormal delay of nearly 20 months is that the appellant concern was practically closed after 1998 and it was only opened for some short period. From the application for condonation of delay, it appears that the appellant has categorically accepted that on receipt of order the same was immediately handed over to the consultant for filing an appeal. If that is so, the plea that because of lack of experience in business there was delay does not stand to be reason. I.T.C's case (supra) was rendered taking note of the peculiar background facts of the case. In that case there was no law declared by this Court that even though the Statute prescribed a particular period of limitation, this Court can direct condonation. That would render a specific provision providing for limitation rather otiose. In any event, the causes shown for condonation have no acceptable value. In that view of the matter, the appeal deserves to be dismissed which we direct. There will be no order as to costs."
Following the above principle enunciated by the Supreme Court as well as the factual position of filing the writ petition belatedly, we are of the view that the petitioner has not explained or shown sufficient cause for the delay in filing the above writ petition. The delay in the present case is nearly 20 months. Hence, the writ petition is liable to be dismissed on the ground of unexplained delay and laches.
9. The second question deals with the merits of the case.
Section 3 of the Central Sales Tax Act is relevant to the case, which reads as follows:
"3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce:- A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase--
(a) occasions the movement of goods from one State to another; or
(b) is effected by a transfer of documents of title to the goods during their movement from one State to another."
`The said provision is already a subject matter of interpretation by the Apex Court in number of judgments.
(i) In the case of SOUTH INDIA VISCOSE LTD., VS. STATE OF TAMIL NADU reported in (1981) 48 STC 232, wherein the Supreme Court has considered the scope and held as follows:
"11. In the instant case there is a clear evidence of the existence of a prior contract of sale as per terms of the allocation card. The fact that actual sale pursuant to the said contract of sale had taken place subsequently does not militate against the transaction being treated as an inter-State sale under
Section 3(a) of the Act, since the movement of the goods delivered to the buyer was occasioned by the contract of sale brought into existence under the terms of the allocation card. It was, however, faintly suggested that the evidence of what took place between the appellant and the allottee within twenty-one days of the issue of the allocation card was lacking in this case. Evidence about these facts was within the knowledge of the appellant and the appellant had not placed it before the assessing authority. It is likely that if such evidence had been produced it would have gone against the appellant. Even apart from that the finding recorded by the assessing authority, the Appellate Authority, the Tribunal and the High Court on the basis of the terms of the allocation card and other material on record that there was a contract of sale within the stipulated time between the appellant and the allottee of art silk yarn is unassailable. In the circumstances no assistance can be derived by the appellant from the case of Tata Engineering and Locomotive Co. Ltd.
12. The decision of this Court in Kelvinator of India Ltd. v. State of Haryana relied on by the appellant has also no bearing on this case. The assessee in that case had its factory where it manufactured refrigerators at Faridabad in the State of Haryana and it moved the goods manufactured by it to its godown at Delhi. The excise pass utilised for such movement was always in favour of self. During the transport of goods, the assessee paid octroi payable for bringing goods into Delhi. At Delhi, the assessee sold the goods to its distributors. The Court on a consideration of the material before it held that even though there were prior distribution agreements entered into between the assessee and its distributors, the goods in question had not been moved pursuant to the said agreements from Faridabad to Delhi, and hence there was no inter-State sale.
13. The facts of this case are, however, close to the facts in English Electric Company of India Ltd. v. Deputy Commercial Tax Officer. Here also the assessee had its factory in the State of Tamil Nadu. Its registered office was at Calcutta but it had branch offices at Madras, Bombay and other places. A Bombay buyer wrote to the Bombay branch of the appellant in that case asking for lowest quotation in respect of the goods which were being manufactured in the factory in Tamil Nadu. After some correspondence between the Bombay branch and the Madras branch, the Bombay branch wrote to the Bombay buyer giving all the required particulars. The Bombay buyer thereafter placed an order with the Bombay branch for certain goods. The Bombay branch informed the Madras branch about the order placed by the Bombay buyer. On receipt of the invoice from the Madras branch the Bombay branch wrote to the Bombay buyer that some of the goods indented by him were ready for despatch and asked for despatch instructions. On receipt of such instructions, the Bombay branch asked the Madras branch to send goods to Bombay. The railway receipts were sent through the Bombay branch. The goods were delivered to the Bombay buyer through clearing agents and the insurance charges were collected from the Bombay buyer. The assessee claimed in the assessment proceedings that the sale was not an inter-State sale but one which had taken place at Bombay between the Bombay branch and the Bombay buyer. The said contention was rejected by this Court with the following observations: (SCC pp. 463, 464 : SCC (Tax) pp. 26, 27, paras 15, 16) The appellant in the present case sent the goods direct from the Madras branch factory to the Bombay buyer at Bhandup, Bombay. The railway receipt was in the name of the Bombay branch to secure payment against delivery. There was no question of diverting the goods which were sent to the Bombay buyer. When the movement of goods from one State to another is an incident of the contract it is a sale in the course of inter-State sale. It does not matter in which State the property in the goods passes. What is decisive is whether the sale is one which occasions the movement of goods from one State to another. The inter-State movement must be the result of a covenant, express or implied, in the contract of sale or an incident of the contract. It is not necessary that the sale must precede the inter-State movement in order that the sale may be deemed to have occasioned such movement. It is also not necessary for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It will be enough if the movement is in pursuance of and incidental to the contract of sale."
(ii) In the case of UNION OF INDIA AND ANOTHER VS. K.G.KHOSLA AND CO. LTD., AND OTHERS reported in (1979) 43 STC 457, wherein the Apex Court has held as follows:
17. This decision may be usefully contrasted with another decision between the same parties, which is reported in State of Bihar v. Tata Engineering & Locomotive Co. Ltd. In that case the turnover in dispute related to the sales made by the company to its dealers of trucks for being sold in the territories assigned to them under the dealership agreements. Each dealer was assigned an exclusive territory and under the agreement between the dealers and the company, they had to place their indents, pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the company. In pursuance of such delivery orders trucks used to be delivered in the State of Bihar to be taken over to the territories assigned to the dealers. Since under the terms of the contracts of sale the purchasers were required to remove the goods from the State of Bihar to other States, no question arose in the case whether it was or was not necessary for a sale to be regarded as an inter-State sale that the contract must itself provide for the movement of goods from one State to another. If a contract of sale contains a stipulation for such movement, the sale would, of course, be an inter-State sale. But it can also be an inter-State sale, even if, the contract of sale does not itself provide for the movement of goods from one State to another but such movement is the result of a covenant in the contract of sale or is an incident of that contract."
(iii) In the case of COMMISSIONER OF SALES TAX, U.P., LUCKNOW VS. SURESH CHAND JAIN reported in (1988) 70 STC 45, wherein the Supreme Court has held as follows:
4. The principles of inter-State sales were well settled. In Bengal Immunity Co. Ltd. v. State of Bihar Justice Venkatarama Ayyar had held that sale could be said to be in the course of inter-State trade only if two conditions concur, namely, (1) a sale of goods and (2) a transport of those goods from one State to another. Unless both these conditions were satisfied, there could be no sale in the course of inter-State trade. There must be an evidence that the transportation was occasioned by the contract and as a result goods moved out of the bargain between the parties from one State to another.
(iv) In an unreported judgment of the Supreme Court in SLP (C Nos.14757 of 1983 dated 20.07.1995 in the case of STATE OF TAMIL NADU Vs. HVL. HERCULES RUBBER CO. ETC., it has been held as follows:
"On these bare facts the question is whether the transactions were in the nature of inter-State sale.
In English Electric Company of India Ltd. Vs. The Deputy Commercial Tax Officer & Others (39 STC 474) this Court held that when the movement of goods from one State to another is an incident of the contract of sale it is a sale in the course of inter-State transaction falling within
section 3(a) of the Act. It does not matter in which State the property in the goods passes. What is decisive is whether the sale is one which occasions the movement of goods from one State to another. If the movement is induced by some convenant or contract of sale or an incident of the contract it would fall within the meaning of an inter-State sale and would attract the provision of
section 3(a). To the same effect is the decision of this Court in South India Viscose ltd., Vs. State of Tamil Nadu (48 STC 232). In that case this Court observed that if there is a conceivable link between any contract of sale and the movement of goods from one State to another in order to discharge the obligation under the contract of sale, the interposition of an agent of the seller notwithstanding, the transaction or character of the sale would be an inter-State transaction. Again in Union of India & another Vs. K.G.Khosla & Co. (P) Ltd. & others (1979) (3) SCR 453, on facts it was found that pursuant to a contract executed at Delhi goods were manufactured at Faridabad. On these facts this Court held that in order that a sale may be regarded as an inter-State sale, it is immaterial whether the property in the goods passes in one State or another because the question whether or not it is an inter-State sale does not depend upon the circumstances as to in which State the property in the goods passes. It may pass in either State and yet the sale can be an inter-State sale. Therefore, for the purpose of
section 3(a) it is not necessary that a contract of sale must itself provide for the movement of goods or that the movement of goods must be occasioned specifically in accordance with the terms of the contract of sale. That apart, if, however, it is established on facts placed on record that the movement of goods was occasioned on account of the contract of sale."
(v) In the case of STATE OF ORISSA AND ANOTHER VS. K.B.SAHA AND SONS INDUSTRIES PVT. LTD., AND OTHERS reported in (2007) 7 VST 214, wherein the Supreme Court has held as follows:
"(i) that in order that a sale might be considered to be one in the course of inter-State trade what was important was that the movement of goods and the sale must be inseparably connected. It was not necessary that there had to be an existent contract of sale incorporating an express or implied provision regarding inter-State movement of goods. Though mere knowledge about the ultimate destination was not sufficient, the cumulative effect of the factual scenario had to be considered."
(vi) In the case of A & G PROJECTS AND TECHNOLOGIES LTD. VS. STATE OF KARNATAKA reported in (2009) 19 VST 239, wherein the Supreme Court has held as follows:
"
Section 3 of the CST Act, 1956 formulates the principles for determining when a sale or purchase takes place in the course of inter-State trade or commerce. The question whether a particular sale is an inter-State sale or an intra-State sale, though essentially one of fact, is not a pure question of fact inasmuch as the facts of a given case have to be examined in the light of
Section 3 and, therefore, it is a mixed question of fact and law.
Section 3 defines when a sale or purchase of goods takes place in the course of inter-State trade or commerce.
After holding so, the Apex Court further held as follows:
"A sale (transfer of property) becomes an inter-State sale under
section 3(a) of the CST Act, 1956 if the movement of goods from one State to another is under the contract of sale, and the property in the goods passes to the purchaser otherwise than by transfer of documents of title when the goods are in movement from one State to another. "
The Apex Court further observed as follows:
"Under the CST Act, 1956, tax is leviable on the sale of goods and not because of the movement of the goods. The movement of the goods is only material for the purpose of deciding whether the sale took place in the course of inter-State trade or commerce or whether such sale was purely an intra-State transaction. The name given to a transaction by the parties concerned, does not decide the nature of the transaction. In order to make a transaction taxable under the CST Act, 1956, the transaction must be a "sale" as defined in
section 2(g) taking place in the course of inter-State or commerce in any of the manners provided for in clause (a) or clause (b) of
section 3. "
10. After taking note of the principles enunciated in the above Supreme Court judgments, we have to find out whether there is movement of goods. The present case falls under
Section 3(a) of the Act. There are two ingredients in the section. i.e. (i) it must be a sale of goods; (ii) the sale occasions the movement of goods from one State to another. In respect of sale, there is no dispute. We have to see here whether there is sale occasioning the movement of goods. In the case on hand, the seller and the buyer contemplated in movement of goods from Tamil Nadu to Kerala. At the instruction of the buyer, the goods were despatched to Sivakasi, wherein conversion took place and after conversion, the goods were moved to Kerala. Because of conversion, it cannot be held that there is no movement of goods. It is only for the purpose of
section 5(3) of the Act that any goods undergoing commercial change is relevant. It is not for the purpose of determining the inter-State sale under
Section 3(a) of the Act. Mere stoppage at Sivakasi and conversion would not alter the character of the transaction. The stoppage and conversion occurred only at the instance of the buyer at Kerala. There is no dispute in respect of the contract. The goods were moved in pursuant to the contract. The goods despatched to Sivakasi were not meant to be sold in the open market. There is no restriction that the goods should be moved intact. It is not for the revenue to suggest that the goods must reach as it is. The authorities, who are acting as guardian of the revenue, must examine and consider the transaction from that of a businessman. The yardstick is that of a prudent businessman. Otherwise, first, the goods has to go to Kerala and then transported back to Sivakasi for conversion and once again after conversion, it must go to Kerala. To avoid multiplicity of transaction, the seller sent the goods to Sivakasi at the instance of the buyer and after conversion, the same was sent to kerala. There is no material available to show that the goods are meant to be in Sivakasi. It is not the contention of the petitioner that the goods were not moved from Tamil Nadu to Kerala. Stoppage and conversion do not make the transaction a local sale. After applying the principles enunciated in the judgments cited supra and also taking into consideration of the facts involved, we are of the view that the transaction involved is only an inter-State sales. On this ground also, we are of the view that there is no merit in the writ petition and same is liable to be dismissed. Accordingly, the writ petition is dismissed. No costs. Consequently, the connected W.P.M.P.No.5643 of 2005 is also dismissed.
raa To The Joint Commissioner (CT)(SMR), State of Tamil Nadu, Chennai 5