NATIONAL ENGINEERING INDUSTRIES Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) The Assessee has filed this Tax Case under Sec. 38(1) of the TNGST Act, 1959 raising the following substantial questions of law arising from the order passed by the Tamil Nadu Sales Tax Appellate Tribunal on 31/3/2016 for the Assessment Year 2004-05, holding that the inter-State Sales made by the Assessee was taxable as local Sales under the provisions of the TNGST Act:-

(2.) The reasons assigned by the learned Tribunal are quoted below for ready reference:-

(3.) The learned counsel for the Appellant/Assessee Mrs.C.Rekha Kumari submitted that the Tribunal as well as the Assessing Authority had fallen into error in misconstruing that the sale was between the parties viz, National Engineering Limited and M/s.Baynee Trading Company, which were located in Chennai and therefore, the inter- State movement of goods from the Assessee to the purchaser in Pondicherry, Union Territory viz., M/s.Gayathri Trading Company was not inter-State Sales. She submitted that the Purchase Order of goods in question was placed by Gayathri Trading Company, Pondicherry on M/s.Baynee Trading Company, Chennai, who, in turn, placed the Purchase Order on the Assessee, M/s.National Engineering Industries to supply the goods in question directly to M/s.Gayathri Trading Company, Pondicherry and she submitted that Gayathri Trading Corporation had issued 'C' Forms in respect of the inter-State Sales to the Seller M/s.Baynee Trading Company and to support the inter-State movement of goods, the Assessee M/s.National Engineering Industries issued Form E1 in respect of these transactions. Therefore, the conditions in respect of E1 Sales were duly satisfied and the supply of goods had taken place in respect of the pre-existing Contract between M/s.Baynee Trading Company and M/s.Gayathri Trading Company and the goods in question were sold by M/s.National Engineering Industries to M/s.Baynee Trading Company and the Consignee was duly shown in both Invoices and Purchase Orders as of M/s.Gayathri Trading Corporation, Pondicherry. Therefore, necessary elements for inter- State Sale were satisfied and the goods were supplied against 'C' Forms and therefore, the local tax could not have been levied on the Assessee. She submitted that the reasons given by the learned Tribunal in its impugned order that merely because two Dealers were situated within the State of Tamil Nadu and therefore, inter-State sales could not have taken place is erroneous and therefore, the present Appeal deserves to be allowed. She relied upon the decision of a Division Bench in the case of Vinay Cotton Waste Company v. The State of Tamil Nadu (1986) 63 STC' 391 (Mad) in which, a co- ordinate Bench of this court held as under:-