Civil Appeal No. 5005 of 2007. Case: Commissioner of Commercial Taxes Vs Desai Beedi Company. Supreme Court (India)
| Case Number | Civil Appeal No. 5005 of 2007 |
| Counsel | For Appellant: P. Venkat Reddy, Sumanth Nookala, Advs. and Venkat Palwai Law Associates and For Respondents: A.V. Rangam, A. Subhashini and D.V. Raghuvamsy, Advs. |
| Judges | H.L. Dattu, C.J.I., Sudhansu Jyoti Mukhopadhaya and Arun Mishra, JJ. |
| Issue | Andhra Pradesh General Sales Tax Act, 1957 - Sections 20(1), 38; Central Sales Tax Act, 1956 - Sections 3, 6A; Andhra Pradesh Minor Forest Produce (Regulation of Trade in Abnus Leaves) Rules, 1970 - Rule 3(13) |
| Judgement Date | March 12, 2015 |
| Court | Supreme Court (India) |
Order:
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These appeals are directed against the judgment and order passed by the High Court of Judicature, Andhra Pradesh at Hyderabad in Special Appeal No. 27 of 1996, dated 20.01.2005. By the impugned judgment and order, the High Court has come to the conclusion that since the transactions in question are inter-State sales, the Respondent-dealer would not be exigible to tax for the assessment year 1989-1990 under the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the Act").
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Briefly stated, facts in the instant case are: The Respondent-Assessee is a registered dealer under the Act and under the Central Sales Tax Act, 1956 (for short, "the CST Act") with effect from 21.02.1989. The Assessee is engaged in the manufacture of 'Beedi' and has its factory and head office at Sholapur in the State of Maharashtra. It operates in the State of Andhra Pradesh through its registered branch office at Sirsilla Road, Kamareddy town, Nizamabad District, Andhra Pradesh.
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The Assessee is the branch office of the Respondent-Company. The Assessee had purchased 'Beedi' leaves, for Rs. 1,07,51,740/- and Rs. 1,01,35,636/- for the assessment years 1989-1990 and 1992-1993 respectively, by participating in the auction conducted by the Forest Department, Government of Andhra Pradesh (for short, "the seller"). After the purchase, the Assessee had dispatched the said 'Beedi' leaves to the head office in the State of Maharashtra. Subsequently, the branch office of the Respondent-Company claimed an exemption on its gross and net turnover of Rs. 1,07,51,740/- and Rs. 1,01,35,636/- for the said assessment years on the ground that the aforesaid transaction is in the nature of inter-State sale and therefore, is not exigible to tax under Entry 18, Second Schedule of the Act.
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The Commercial Taxes Officer, Kamareddy (for short, "the CTO"), by its orders dated 11.03.1992 and 31.07.1993 in G.I. No. 646/1989-90 and G.I. No. 646/1992-93 respectively, has rejected the claim for exemption made by the Assessee and held that the sale is a single point sale where Assessee was the final purchaser within the State and thus, the taxable event took place in the State.
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Being aggrieved by the said order(s) passed by the assessing authority, the Assessee had carried the matter(s) in appeal before the First Appellate Authority, i.e., the Appellate Deputy Commissioner, Secunderabad Division, Hyderabad.
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The First Appellate Authority allowed the appeal(s) filed by the Assessee holding that the transactions were inter-State sales and not liable to be taxed under the Act. The First Appellate Authority by its order dated 19.10.1993, after setting aside the assessment order, remanded the matter(s) back to the Assessment Officer for reassessment.
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During the pendency of the matter(s) before the CTO, the Commissioner of Commercial Taxes issued a show cause notice to the Assessee and proposed to revise the aforesaid order passed by the First Appellate Authority, dated 14.11.1994. After the receipt of a reply by the Assessee, the revision proceedings were initiated Under Section 20(1) of the Act. The Assessee had adopted the stand that after the purchase and delivery of 'Beedi' leaves from the seller, the leaves were dispatched to their head office at Sholapur in the State of Maharashtra as branch transfer and hence the transaction was not liable to tax in the State of Andhra Pradesh. The Assessee has further contended that since the transport the 'Beedi' leaves to their head office at Sholapur was the primary intention of purchase and the Assessee-branch office merely acted as a conduit pipe of the head office of the Respondent-Company for proper movement of goods, the sale ought to be deemed complete after its delivery to the head office and therefore, the transaction must be considered as an inter-State sale. The Assessee, in conclusion submitted that the purchases are in the nature of inter-State trade and consequently, the sale of 'Beedi' leaves is not exigible to tax Under Section 38 of the Act. The Revisional Authority, considering the aforesaid submissions, has observed that the office of the Assessee at Kamareddy is not an agency but a branch office of the Respondent-Company and therefore, the transactions effected by the Assessee are not agency transactions on behalf of the non-resident principal. Further, it has observed that since the delivery took place in the State of Andhra Pradesh at the godowns of the seller and it is only thereafter that the goods were transferred at the instance and application of the Assessee specifying the mode of transport, route of transport and the destination to which the goods have to be transported, it could be deduced that the transaction took place in the State of Andhra Pradesh between the seller and the Assessee. Therefore, the Revisional Authority has come to the conclusion that the transaction is liable to tax under the Act and set aside the order of the First Appellate Authority and consequently, restored the order passed by the CTO, dated 23.02.1996.
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Aggrieved by the order so passed, the Assessee had approached the High Court by way of Special Appeal No. 27 of 1996. The High Court has observed that the goods in the present case were...
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