J M A INDUSTRIES PRIVATE LTD Vs. STATE

JUDGEMENT

(1.) THIS order will dispose of Sales Tax References Nos. 13 to 17 of 1971. These references relate to the assessment years 1961-62 to 1965-66. The facts are common and need only be stated in Reference No. 17 of 1971. The assessee-company is a private limited company having its registered office at 8, Padmani Enclave, Haus Khas, New Delhi. It manufactures electric horns, wiper arms, wiper blades and other motor car accessories The head office is a registered dealer under the Bengal Finance (Sales Tax) Act, as extended to the Union Territory of Delhi, as well as under the Central Sales Tax Act, 1956. The factory is situate in the State of Haryana and is also a registered dealer under the Punjab General Sales Tax Act and the Central Sales Tax Act. In the present reference, we are only concerned with the sale of goods which were made in the following manner : Orders were placed at the head office by customers. Those orders were transmitted to the factory. The factory packed the goods and sent the goods to the head office where they were delivered to the customers on payment of price.

(2.) ADMITTEDLY, the sale took place at Delhi. The only question is whether these sales are liable to Central sales tax under Section 3 (a) of the Central Sales Tax Act, 1956. The company's case was that the sales took place after the goods reached Delhi. Therefore, the sales were between the head office at Delhi and the customers in Delhi. The company took the stand that the head office was not bound to sell the goods ordered by a prospective purchaser to him and it had the absolute discretion to sell the same to anyone else. The Assessing Authority did not accept the stand taken by the assessee and held that the goods supplied to customers after the orders have been booked by the Delhi head office from Faridabad amounted to inter-State sales. The reasons which prevailed with the Assessing Authority may now be stated in its own words : There is no written statement or contract for sale and the assessee could not prove that the contract is conditional except by producing affidavits of the customers to the effect that mostly goods are delivered from the head office. The affidavits are of the general nature and do not prove the nature of each specified transaction in this context. The assessee must, in the first instance, prove that the goods have been transferred to the head office from the factory in bulk without any reference to their supply to customers from the sub-office at Faridabad. Secondly, they must produce evidence that goods have been sold at Delhi independent of their movement from the factory premises for the specified customers, i. e. , that'these sales have not occasioned the movement of goods from Faridabad to Delhi.

(3.) THE assessee preferred an appeal to the Deputy Excise and Taxation Commissioner against the order of the Assessing Authority. The appeal was rejected with the following observations : In the present case, there is no denying the fact that the contract was placed with the head office at Delhi but the goods had actually moved from Faridabad to Delhi as a result of that contract for sale. It makes little difference whether the contract was given to the head office or to the factory at Faridabad because the proprietors of the head office and factory are one and the same. The net result is that the goods had actually moved from one State to Another as a result of the covenant or incident of the contract of sale. Besides the above legal aspect there is lot of circumstantial evidence on the file to prove that the goods were not actually transferred to the head office. It is clear that the goods moved from Faridabad are not physically transferred to the head office at any stage. The appellant has not been able to produce any evidence to show the existence of goods at any time at the head office for its distribution for sale at Delhi. There is no receipt or despatch register maintained by the head office by which it can be known as to which of the goods were actually received on certain dates from the factory at Faridabad and which were disposed of and which remained in the balance. The mere existence of the so-called administrative office in a miani taken in the premises of Messrs. Jullundur Motor Agency Private Limited, Delhi, does not establish the fact that the goods were transferred from the factory to the head office at Delhi. If the goods had actually been transferred, there should be some kind of godown or other place to store them and there should be a regular stock register showing the position of stock at different times but all this kind of evidence is wanting in the present case.