STATE OF ANDHRA PRADESH Vs. IDL CHEMICALS LTD.

JUDGEMENT

(1.) THE State is the petitioner in this Tax Revision Case, which is directed against the order of the Tribunal in T.A. No. 394 of 1987 passed on 25.9.1987. The respondent -assessee, M/s. I.D.L. Chemicals Limited, was assessed under the Central Sales Tax Act for the assessment year 1978 -79. The assessing authority granted exemption on the turnover of the year 1978 -79 on the ground that it represents the stock transfers to non -resident agents in other States. But that order of the assessing authority was revised by the Deputy Commissioner invoking the power under Section 20(2) of the A.P.G.S.T. Act read with Section 9(2) of the Central Sales Tax Act; he withdrew the exemption in respect of the turnover of Rs. 5,78,28,661/ - holding that it represents the inter -State sales.

(2.) THE assessee is manufacturing detonators. It has the head office at Hyderabad and the factories in Hyderabad (A.P.) and in Ranchi (Orissa State). There are three non -resident agents in these States. From time to time its stocks are transferred from the factory in bulk to the agents. The assessee's case is that orders are placed by the purchasers with the non -resident agents who are always holding the stocks with them and therefore there was no inter -State sale as such. This was accepted by the assessing authority to grant exemption of turn -over. The revising authority treated the transfer of goods to the nonresident agents in those States as inter -state sales by virtue of the orders placed with the agents. On the assessee's appeal, the Sales Tax Appellate Tribunal restored the exemption by setting aside the order of the revising authority.

(3.) A Division Bench of this Court of which one of us (Syed Shah Mohammed Quadri, J) was a member, in State of A.P. v. Coromandel Paints & Chemicals Ltd. ( : 20 APSTJ 74), on interpreting Section 3(a) and 6 -A of the C.S.T. Act, laid down the principle to determine the question whether the transaction is an inter -state sale or stock transfer. It was observed: