ECE INDUSTRIES LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE above Tax Case Revision is filed at the instance of the assessee as against the order of Sales Tax Appellate Tribunal dated 22.3.2010 passed in STA No.175 of 2006 in respect of assessment year 2000 -01. The above Tax Case Revision was admitted on the following substantial questions of law: -

(2.) THE assessee herein is engaged in the business of manufacturing, erection of lifts, lift spares etc. The assessee have registered office at Delhi and factory at Ghaziabad, wherein, manufacturing activities are carried on. The assessee herein is one of the Branch Offices in Tamil Nadu. The modus operandi of the business of the branch is firstly to enter into an agreement with the customers for supply, erection and commissioning of lifts at the rates mutually agreed upon between the customers and the assessee. On entering into the agreement, the extract of purchase order and the description of the list will be sent to their factory at Ghaziabad and on receipt of the details regarding the specifications of the lift, place where the lift is being erected, the job number etc., their factory at Ghaziabad will prepare the drawing, which will tally with the description of the lifts and forward the same to the dealers for getting approval of the customer. Then the Branch Office will get approval from the customers and the copy of the approved drawing will be sent to the factory at Ghaziabad for planning the manufacture of the spares of the lifts at Ghaziabad by duly mentioning the job number. The Branch Office will thereafter be duly intimated by the factory regarding the development of the production and the Branch Office will also be intimated about the completion of the project and the lifts will be dismantled and despatched from the factory directly to the customer site. On being informed so, the materials will be either taken delivery by customer or by their technical representative and thereafter, the technician will be sent from the Branch Office for erection of the lift at site. Thus, the modus operandi is that the goods will be manufactured at Ghaziabad factory according to the specifications given in the job order indicated by the customer by the Branch Office and thereafter, finished article will be despatched from Ghaziabad factory to the customer site, outside the state and be taken delivery by the customer and erected by the assessee's technician at customer's site.

(3.) AGGRIEVED against the same, the assessee preferred an appeal before the lower Appellate Authority. The lower Appellate Authority, in paragraph 7 of its order found that lifts are manufactured at Ghaziabad and sent to the customer's site for erection and invoices raised from the Ghaziabad factory mentioned the name of the ultimate buyer and exercise duty was charged by the Factory. The delivery invoice and L.R. also stated the consignee as Erection : Engineer ECE Industries Limited., C/o. Erode Kalvi Nilayam or Shanthi Hospital or Sirushri Constructions i.e. name of the ultimate buyer. As such there was a link or nexus between the work order received by the assessee from the customer within State of Tamil Nadu and the movement of goods originated from outside Tamil Nadu into Tamil Nadu for work at customer's site. As such, the transaction was interstate sale and hence the assessee is eligible for deduction under Section 3 -B(2) of the Tamil Nadu General Sales Tax Act and accordingly, reversed the Assessing Officer's finding regarding the levy of tax and also penalty.