Writ Appeal Nos. 452/2010, 423, 457, 439, 431, 424, 456, 430, 426, 425, 443, 453, 444, 459, 373, 376, 644, 577, 487, 501, 503, 641 of 2010, 03/2011, 406/2010, 12/2011, 414, 408, 427, 434, 445, 375, 578, 576, 492, 374, 611, 370, 502, 367, 389, 380, 491, 647, 530, 450, 460, 447, 381, 409, 455, 442, 451, 645, 504, 396, 411 of 2010, 2/2011, 386/201.... Case: M/s. K.K. Vyas and Others Vs State of Chhattisgarh and Others. Chhattisgarh High Court
| Case Number | Writ Appeal Nos. 452/2010, 423, 457, 439, 431, 424, 456, 430, 426, 425, 443, 453, 444, 459, 373, 376, 644, 577, 487, 501, 503, 641 of 2010, 03/2011, 406/2010, 12/2011, 414, 408, 427, 434, 445, 375, 578, 576, 492, 374, 611, 370, 502, 367, 389, 380, 491, 647, 530, 450, 460, 447, 381, 409, 455, 442, 451, 645, 504, 396, 411 of 2010, 2/2011, 386/201... |
| Counsel | For Appellant: Mr. Ravindra Shrivastava, Mr. G. N. Purohit, Sr. Advocates, Mr. Anup Majumdar, Mr. Ashish Shrivastava, Mr. Naveen Prakash, Mr. Anup Jain, Mr. Harsh Wardhan, Mr. Devendra Patel, Mr. Rakesh Ranjan Agrawal, Mr. Abhishek Oswal, Mr. Anand Dadariya, Mr. Neelabh Dubey, Mrs. Smiti Sharma, Mr. Pankaj Shrivastava, Mr. Parag Kotecha, Mr. ... |
| Judges | Dhirendra Mishra and Rangnath Chandrakar, JJ. |
| Issue | Central Sales Tax Act, 1956 - Sections 2(g), 3, 3(a), 9; Constitution of India - Articles 19, 19(1), 304, 304(b); Income Tax Act, 1961 - Sections 206C, 206C(1) |
| Judgement Date | April 19, 2011 |
| Court | Chhattisgarh High Court |
Judgment:
Dhirendra Mishra, J.
1. These writ appeals are being disposed of by this common judgment as the same are directed against the common order dated 1-10-2010 passed by the learned Single Judge, whereby their writ petitions for issuance of a writ of mandamus to respondents to treat the trade in question as inter-State trade and other consequential relief's, have been dismissed. Briefly stated, facts of the case are that the appellants are dealers of Tendu Patta and registered under the Chhattisgarh Commercial Act, 1994. They are also registered as exporters of Tendu Patta under the M.P./C.G. Tendu Patta Niyamawali, 1966. In response to tender notice issued by the Chhattisgarh State Minor Forest Produce (Trading and Development) Co-operative Federation Ltd. (for short "the Federation"), the appellants submitted their tender forms for purchase of Tendu Leaves and they were allotted forest Tendu Leave lots and accordingly, purchase agreements were executed under Conditions No. 7 of the lender notice. The appellants were also required to pay taxes under the terms of the purchase agreement and the appellant's challenge to imposition of taxes under the terms of the purchase agreement has been dismissed by the learned Single Judge by the impugned order.
Submission on behalf of Shri Ravindra Shrivastava, Sr. Advocate with Shri Anup Majumdar & Shri Ashish Shrivastava, Advocates for the Appellants in W.A. No. 367/2010
2. The only question for consideration in this group of writ appeals is-- Whether purchase of Tendu Leaves by the appellants, who are registered exporters of Tendu Leaves in the State of Chhattisgarh, is inter-State or intrastate sale? There is a complete State monopoly in the trade and transport of Tendu Leaves in the State, which is governed under the provisions of Chhattisgarh Tendu Patta (Vyapar) Viniyaman Adhiniyam, 1964 (for short "the Adhiniyam, 1964") and the Chhattisgarh Tendu Patta (Vyapar) Viniyaman Niyamawali, 1966 (for short "Niyamawali, 1966") framed under the Adhiniyam, 1964. For the purposes of purchase and transport of Tendu Leaves, tender notice is published by the respondent Federation for advance sale of Tendu Leaves in each season. The tender notice provides for the terms and conditions of the tender as well as standardized form of purchase agreement, which a tenderer has to execute upon acceptance of his tender. From perusal of various provisions of the Adhiniyam, 1964; Niyamawali, 1966 framed thereunder; the transport permits issued by the officers under the Niyamawali, 1966, the relevant clauses of the tender notice and purchase agreement, it would be evident that the agreements are subject to the provisions of the Adhiniyam, 1964, the rules made thereunder, the orders and notifications issued from time to time under the said Adhiniyam and the rules and terms & conditions of the tender, notice including general/other terms & conditions of the tender and instructions for tenderer contained in Annexure P-1 of the tender notice, and they form part of the agreement. Clause 10 of the tender notice specifically provides that if the terms & conditions of the tender notice pertaining to delivery and sale (Parivahan/Nikasi) of this agreement are not fully complied with, it will be deemed that the purchase of leaves has not taken place. Whereas under Clause 18 of the tender notice, the purchaser cannot transport Tendu Leaves without a valid transport permit by the Competent Authority, as contemplated under the Adhiniyam, 1964 and the Niyamawali, 1966.
A conjoint reading of Sections 5(2)(b) and 11 of the Adhiniyam, 1964 makes it clear that two types of purchasers of Tendu Leaves are contemplated under the Adhiniyam, i.e., manufacturers of Bidis within the State and exporters of Tendu Leaves outside the State. The appellants' case pertains to exporters of Tendu Leaves, as defined in Rule 2 (5) of the Niyamawali, 1966. Thus, whenever Tendu Leaves are sold to exporters in the State, the sale is for the purposes of exporting the same outside the State.
3. Referring to sub-section (2) of Section 5, it was argued that Tendu Leaves for sale outside the State may be transported by such person outside the unit in accordance with terms and conditions of the permit to be issued in the prescribed manner. Even the excess quantity of the Tendu Leaves left after export, cannot be sold without permission of the State Government or any Authorised officer under Section 12(A) of the Adhiniyam, 1964.
Thus, from the above, it is manifestly clear that the registered exporters of Tendu Leaves in the State of Chhattisgarh are required to transport the goods outside the State under an obligation of the Statute and Contract. There is an inextricable connection between sale of Tendu Leaves to the registered exporters and movement thereof to outside the State; Tendu Leaves cannot be moved without transport permit; transport permit facilitates movement of goods from the State of Chhattisgarh to outside the State, and failure to observe the terms & conditions of the transport permit renders the whole transaction of sale incomplete, and therefore, contention of the respondents that exporter is free to transport or dispose of the Tendu Leaves after he purchases the same from respondent No. 2, is not tenable.
4. The very premise of the impugned order that the provisions of the Adhiniyam, 1964 and the Niyamawali, 966 do not form parts' of the agreement, i.e., contract of sale, and movement of Tendu Leaves are independent and separable and have no bond or link in between, is, ex facie, patently wrong and erroneous and the same is based on total disregard to and/or provisions of the Adhiniyam, 1964, and the purchaser's agreement. The observations that sale of Tendu Leaves is purely an internal sale and that movement of goods is not occasioned by the sale, but takes place after property is purchased, is also erroneous.
5. The judgment in the matter of Balabhgas Hulaschand Vs. State of Orissa, (1976) 2 SCC 44, had no application to the facts of the present case, as it settled law that it is immaterial whether the completed sale precedes the movement of goods or follows the movement of goods or for that matter, takes place while the goods are in transit. What is important is that the movement of goods and the sale must be inseparably connected.
Reliance is placed on the decisions in the matters of Commissioner of Sales Tax, U.P. Vs. Bakhtawar Lal Kailash Chand Arthi, (1992) 3 SCC 750, Union of India Vs. K.G. Khosla, (1979) 2 SCC 242, and Indian Oil Corporation Ltd. Vs. Union of India, (1980) Suppl. SCC 426.
6. Further relying upon the decision of the State of Bihar Vs. Tata Engineering and Locomotive Company, (1970) 3 SCC 697 and Ben Gorm Nilgiri Plantation Co. Vs. Sales Tax officer, AIR 1964 SC 1752, it was argued that when a contract of sale or law under which goods are sold requires those goods to be exported or imported, the same would be considered as sale in the course of export or import/inter-State sale.
Submission by Shri R.R. Agrawal, Advocate on behalf of the Appellants in W.A. Nos. 389/2010, 390/2010, 391/2010, 392/2010, 393/2010 and 605/2010
7. Adopting the arguments advanced by Shri Ravindra Shrivastava, learned Sr. Advocate, it was argued that appellant-Shyam Bidi Works Ltd., is a company registered under the Companies Act, 1956 having its registered office at Allahabad. It has manufacturing unit in Bihar, Jharkhand and West Bengal, however, it has no manufacturing unit in the State of Chhattisgarh. The appellant is a registered dealer in the State of Bihar, Jharkhand, West Bengal, Uttar Pradesh and Chhattisgarh as also under the Central Sales Tax Act. The appellant was granted registration by respondent No. 3 as manufacturer and exporter of Tendu Leaves in the format prescribed under Rule 8 (2) of the Niyamawali, 1966. At the time of submitting his tender, the appellant was also required to mention its registration number with date of registration, attaching photocopy of the registration certificate. Dy. Commissioner, Income Tax, Allahabad, with whom the appellant is assessed, issued certificate under Section 206-C of the IT Act in Form 27-C, directing the Conservator of Forest not to collect TDS under Section 206-C (1) of the IT Act, in respect of goods specified in Para 2 as they are for manufacturers of Bidis. However, the learned Single Judge did not consider the above aspect and the fact that the Conservator of Forest did not deduct tax as per order dated 30th August, 2002 (Annexure P-11), which clearly demonstrates that Tendu Leaves sold to the appellant by the respondent was exported out of Chhattisgarh. The case in hand is squarely covered by the decision of the Supreme Court in case of State of Orissa Vs. K.B. Saha, (2007) 9 SCC 97, and the learned Single Judge has wrongly distinguished it in Para 118 of his judgment.
8. The appellant, as a exporter, purchased Tendu Leaves and transported the same to its factories in different States on the basis of TP-4 Main and TP-4 Subsidiary issued by DFOs in accordance with Rule 4 of the Niyamawali, 1966 and thus, the sale or purchase of Tendu Leaves shall be deemed to have taken place in the course of inter-State trade under Section 3(a) under the Central Sales Tax Act as the sale and purchase had occasioned the movement of Tendu Leaves from the State of Chhattisgarh to other States Bihar, West Bengal and Jharkhand, where its manufacturing units are situated.
9. Referring to the circular dated 10-10-2001 of Commissioner of commercial Tax and order of the Additional Commissioner of Commercial Tax dated 26-4-2010 filed along with supplementary affidavit dated 16-9-2010, it was argued that in the aforesaid circular/orders, the transaction was treated as inter-State sale, notwithstanding that the delivery was given in depot, and the learned Single Judge has erred in holding that the aforesaid circular is not applicable to the appellants' case.
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