V K ABDUL JABBAR SAHIB SON Vs. VICE CHAIRMAN AND MANAGING DIRECTOR A P FOREST DEVELOPMENT CORPN HYDERABAD

JUDGEMENT

(1.) The petitioners are dealers in Beedi-leaves registered under the Tamil Nadu General Sales Tax Act and Central Sales Tax Act. Their places of business are situated in Tamil Nadu State. The petitioner in W.P. No.27129 of 1996 is a manufacturer of beedi-leaves as well. They entered into agreements with A.P. Forest Development Corporation Limited (hereinafter referred to as 'Corporation') for the purchase of abnus leaves plucked and collected during 1997 season from the forest areas of Kothagudem division and Mancherial division in Andhra Pradesh. They are challenging the legality of the clarification issued by the Commissioner of Commercial Taxes (2nd respondent) to the Corporation in his reference No.A1 (3/2312/96 dt 18.10.1996. By that letter, the Commissioner clarified that the movement of beedi-leaves to the other State is not occasioned by any contract of sale and therefore the sale by the Corporation to a dealer from the other State is also a local sale. The Commissioner therefore advised the Corporation to collect the sales tax at 9% on all sales under entry 196 of the I schedule to the A.P.G.S.T. Act. The petitioners seek a consequential direction to charge sales tax from them at 4% only on collecting the 'C' declaration forms from the petitioners under the provisions of the Central Sales Tax Act. In other words, it is the contention of the petitioners that the sales effected by the Corporation to them are inter-state sales but not local sales. In support of their contention, the petitioners rely on the fact that their places of business are outside the State of A.P. and after taking delivery of the beedi-leaves from the Corporation, they transport the same to their business places in Tamil Nadu State, on the strength of transport permits issued by the Forest authorities. According to the petitioners, the permits clearly mention the route by which the goods will have to be transported and the ultimate destination in the other State. It is therefore contended that the movement of goods from one state to another is a necessary incident of the contract of sale and that it is immaterial whether the property passes within the State of A.P.

(2.) A copy of the route-permit or the transport permit has not been filed. A perusal of the terms of the Agreement filed in one of the cases indicates in unmistakable terms that the transaction of sale as between the Corporation and the petitioners is completed in all respects within the State of Andhra Pradesh. It may be that for the purpose of enabling the petitioners to transport the beedi-leaves purchased from the Corporation without any hindrance, the route-permit is issued by the Forest Department. This by itself does not impress the transaction with the character of inter-state sale within the meaning of Section 3(a) of the Central Sales Tax Act. It is not a case where the agreement contemplates the movement of goods from one state to another as a necessary consequence or concomitant' of sale. From the averments in the affidavit and from the terms of the agreement, it is clear that the movement of goods subsequent to taking delivery from the Corporation godowns by the petitioners to their places of business in the other State was on their own account and such movement is not an integral or inextricable part of the contract. After taking delivery on fulfilment of the conditions laid down in the agreement, the buyer can move and dispose of the beedi-leaves to whichever place and in whatever manner he likes. Whether he sells or consumes the beedi-leaves (purchase) within the State of A.P. or whether he moves the beedi-leaves to his own place of business in the other State for the purpose of sale or for manufacturing purpose is entirely the choice of the buyer (petitioners). No breach of the agreement is committed even if the beedi-leaves purchased by the petitioners are not moved to the places of business of the petitioners located in the other State. There is no term in the contract express or implied which obliges the buyers to take the beedi-leaves to the other State. The inter-state movement of the goods is neither a covenant of the contract nor is it a necessary incident of the contract. In other words, there is no inextricable bond between the contract of sale and the subsequent interstate movement of the goods by the buyer. We are not at all satisfied that the tests relevant to Section 3(a) of the Central Sales Tax Act as laid down by the Supreme Court in a series of pronouncements including the recent case of Co-operative Sugars (Chittur) Ltd. v. State of Tamil Nadu, 1993 ST Vol.90 page 1 are satisfied in the instant case. We have, therefore, no hesitation in rejecting the contention of the petitioners. We cannot therefore hold that the clarification given by the Commissioner is contrary to the provisions of the Central Sales Tax Act. That apart, it is pertinent to mention that the petitioners have agreed to pay sales tax as per the provisions of A.P.G.S.T. Act. Having so undertaken, the petitioners are only trying to wriggle out of their obligation to pay the local sales tax raising a spurious argument that the sale is not a local sale.

(3.) The writ petitions are without merit and therefore dismissed with costs quantified at Rs.500/- in each case.