Sukhdev Singh Kang, J.@mdashM/s Mehta Group of Industries, Bahadurgarh, the Applicant ""herein, is engaged in the manufacture and sale of
Saccharine (a substitute for sugar), colours-which are mixed in eatables and drinks, and straws. It got itself registered as a dealer with liability to
pay tax with effect from November 4, 1970. For the Assessment Year 1970-71, it filed two quarterly returns for the 3rd and 4th quarters. It
claimed that goods worth Rs. 99,641.65 had been transferred to its Head Office at Delhi and as such they were not exigible to tax. The Assessing
Authority classified these goods, which had been avowedly transferred to the Delhi office, in two categories. In the first category were put those
sales which were made to buyers outside the Union Territory of Delhi. In all these cases, the goods received from the factory at Bahadurgarh were
despatched to the purchasers in various States on the very day they were received at Delhi. In one or two cases they were despatched a day or
two later. The Asseessing Authority concluded that the movement of the goods from Bahadurgarh in Haryana had been occasioned by prior
orders. The Assessing Authority included the goods sold to the customers at Delhi in the second category. He observed that there was a numerical
similarity between the goods despatched from Bahadurgarh and those sold at Delhi on a particular day. Generally, the goods had been sold in bulk
on the same day. Sales were in favour of three customers. He concluded that these goods had also been moved in pursuance of pre-existing
orders. The Applicant/ dealer had also claimed that sales amounting to Rs. 6,687 were made against ''C'' forms and were liable to tax at the rate of
3 per cent and; not 10 per cent. This contention was accepted. However, regarding the remaining sales an additional demand was created.
Aggrieved, the Applicant /dealer went up in appeal and contended that the goods had been only transferred from the factory at Bahadurgarh in
Haryana to its Head Office at Delhi, and these were not inter-State sales. The goods were manufactured in the ordinary course and not to the
specifications of the buyers. The Deputy Excise and Taxation Commissioner was informed by the Applicant/dealer that it had no documentary
evidence to show as to how the goods had moved from Delhi to various places in other States. He was also not satisfied with the plea of the
Applicant/dealer that the various sales at Delhi had not been resulted from any specific orders. The appeal was declined.
2. In the second appeal before the learned Tribunal, the Applicant/dealer raised the same very pleas, i.e., that the goods had been transferred from
its factory at Bahadurgarh (Haryana) to its Head Office at Delhi and sold to various customers. There was no previous order. It was further
pleaded that though before the Assessing Authority the orders of the Sales-tax authorities of Union Territory, Delhi levying tax at the rate of 3 per
cent on Inter-State sales were produced, yet he had levied tax on those Sales at the rate of 10 per cent. It was contended that onus of proving that
the sales in question were exigible to tax lay heavily on the Department and they had miserably failed to discharge that onus.
3. These submissions did not find favour with the learned Tribunal. Taking into account the facts and circumstances of the case, the learned
Tribunal recorded a finding of fact that there were prior contracts between the buyers and the dealer and in pursuance of those contracts, the
goods moved from Bahadurgarh in the State of Haryana to its Head Office at Delhi. He was particularly impressed by the numerical similarity
between the goods transferred from Bahadurgarh to the parties in Delhi and the fact that the; goods had been sold either on the very same day
when they arrived at Delhi or within a day or two thereof and that too in most cases in the same quantities which were received from the factory.
4. On the application of the Applicant/dealer u/s 42 of the Haryana General Sales Tax Act, 1973, the learned Tribunal has stated the case and
referred the following two questions for our opinion:
(1) Whether, in the facts and circumstances of the case, the movement of goods constitutes sale in the course of Inter-State trade and commerce
warranting imposition of tax u/s 3(a) read with Section 9 of the Central Sales Tax Act, 1956 ?
(2) Whether, in the facts and circumstances of the case, sales: affected by the firm at Delhi in the course of inter-State trade and commerce and tax
paid thereon at the rate of 3 per cent against ''C form could be assessed at the rate of 3 per cent or 10 per cent?
5. The learned Tribunal, while deciding the appeal, has referred to the order of the Assessing Authority. He has not culled out the various
transactions noted by the Assessing Authority but has relied on them. He deemed the details of those transactions available in the order of the
Assessing Authority to be part of the order, on appeal, by the learned Tribunal. The learned Counsel for the Applicant/dealer, has not challenged
the correctness of the details of the transactions either before the authorities or before us. The particulars of the goods alleged to have been sold by
the Applicant/ dealer to the parties outside Union Territory of Delhi are as follows:
Date of sale Nature and Amount Purchaser''s Remarks
quantity of name
goods sold
21-1-1971 Colour 20 Kgs.715.00 M/s Uttam & Goods were transferred from Bahadurgarh
Company, to Delhi on 21-1-1971
Allahabad
5-2-1971 Colour 25 Kgs.215.60 M/s Krishna Goods were transferred from Bahadurgarh
Trading to on 5-2-1971
Company,
Kanpur
20-2-1971 Colour 15 Kgs.472.50 M/s Goods were transferred from Bahadurgarh
CharanjiLal & to on 17-2-1971
Company,
Ludhiraa
24-2-1971 Straws 250 262.50 Ditto Ditto
Kgs.
3-3-1971 Saccharine 1943.20 M/s P. Singh Goods were transferred on 3-3-1971 from
preparations Vahu, Bahadurgarh to Delhi
800 dibbi
9-3-1971 Ditto 1943.20 Ditto Goods were transferred on 8-3-1971 from
Bahadurgarh to Delhi
20.3-1971 Ditto 1943.70 Ditto Goods were transferred on 19-3-1971
from Bahadurgarh to Delhi
It is manifest from a perusal of the above data that the goods were transferred to the buyers in other States in the same quantities in which they
were received from the factory at Bahadurgarh. In 3 out of these 7 cases, the goods were despatched on the same day when they were received
though the buyers happened to be from Allahabad, Kanpur and Madras. One fails to understand how the buyers in distant places situated in
various States of the country became aware about the exact quantity and the date of arrival of the goods from the factory of the Applicant/dealer
to its Head Office at Delhi. Whatever quantity of the goods was received was despatched on the same day. The Applicant/dealer stated that there
was no record of any orders placed by the buyers. It is difficult to believe that without any order in writing a prudent businessman will despatch the
goods to unknown buyers in far-flung places. The explanation of the Applicant/dealer that some friend or agent of these buyers may have placed
the order at Delhi has rightly been rejected by the authorities.
6. The particulars of the sales to buyers at Delhi also deserve reproductions:
Case No. Data Nature of order
CWJC No. 6.7.83 Stay of further proceedings with respect to the lands of the petitioners.
2849/83 The acquisition proceedings for other land may proceed.
CWJC No. 7.9.83 No fresh step shall be taken In pursuance of notification dated 18.4.81.
2362/83.
7.10.83 Status quo In respect of the lands claimed by the petitioners shall be
maintained. The order dated 7.9.83 stands modified to that extent.
23.3.84 No fresh step shall be taken in pursuance of notification dated 18.4.81.
Petitioners however, are restrained from making any further constructions
in the meantime.
CWJC No. 10.2.84 Status quo shall be maintained.
6000/83
CWJC 23.3.84 No fresh step shall be taken. Petitioners however restrained from making
5904/83 further constructions.
CWJC No. 23.3.84 -do-
93/84
CWJC No. 23.3.84 -do-
904/84
CWJC No. 23.3.84 -do-
924/83
CWJC No. 23.3.84 -do-
940/84
CWJC No. 23.3.84 -dc-
953/84
CWJC No. 23.3.84 -do-
957/84
CWJC No. 23.3.84 -do-
998/84
CWJC No. 27.2.84 Status quo shall be maintained.
1040/84
23.3.84 No fresh step shall be taken, petitioners however restrained from making
further constructions.
CWJC No. 27.2.84 Status quo shall be maintained.
1041/84
23.3.84 No fresh step shall be taken. Petitioners however restrained from making
further constructions.
CWJC No. 27.2.84 Status quo shall be maintained
1042/84
23.3.84 No fresh step shall be taken. Petitioners however restrained from making
further constructions.
CWJC No. 2.3.84 Status quo shall be maintained.
1108/84
23.3.84 No fresh step shall be taken. Petitioners however restrained from making
further constructions.
CWJC No. 10.2.84 Status quo shall be maintained.
6000/83
CWJC No. 26.4.84 Status quo shall be maintained.
1618/84
CWJC No. 14.5.84 Possession will not be taken from the petitioner.
2365/84
CWJC No. 11.6.84 Status quo.
2780/84
CWJC No. 19.6.84 Status quo.
2963/84
CWJC No. 29.4.88 Acquisition of the land initiated by the petitioner society shall remain
2755/84 stayed.
CWJC No. 4.8.94 Petitioner shall not be dispossessed from his house.
11788/93
CWJC No. - -do-
11789/93
CWJC No. 11.7.95 May renew the prayer for interim relief when there is threat of
9515/94 dispossession.
7. There are only three buyers. On December 12, 1970, 24.400 Kgs. Saccharin was received from the factory and, this Sachharin was to M/s
Pappi Chemicals on December 13, 1970. On December 14, 1970, 28.400 Kgs. of Saccharin was received and sold to M/s Mehta Brothers (10
Kgs.) and Pappi Chemicals (18.400 Kgs.). 5 Kgs. of colour was received on 15th December, 1970 and sold on 16th December to M/s Mehta
Brothers. In the same manner have taken place the other transactions. Every manufacturer has a certain capacity for manufacturing particular items.
Despatch of goods from the factory to Head Office at Delhi does not conform to any set pattern. On 15th December, 1970, only 5 Kgs. of
Colour is despatched, whereas on 21st December, 1970, 37 Kgs. of colour is despatched. On 22nd December, 1970, the Head Office, Delhi
receives 35 Kgs. of colour, and on that very day another consignment of 16 Kgs. of colour is received by the Head Office. Same is the case with
Saccharin. Furthermore, one fails to understand as to why colour was received in two consignments on 22nd December, 1970 and the same were
sold in those two consignments. Similarly, on 24th December, 1970, Saccharin was received in the Head Office at Delhi in two consignments of
40 Kgs. and 17 Kgs. and they were sold in the same quantities. These facts clearly establish that the goods were despatched from the factory not
as and when they were manufactured but in compliance with specific orders in which the quantities sought to be purchased had been mentioned.
The goods were sent in the same bulks as were required by the buyers. The goods have not moved in the ordinary course from the factory to the
Head Office at Delhi. The Applicant/dealer had also admitted that apart from the goods which have been sold in the above transactions, they had
no stock. So, these circumstances clearly establish that the movement of the goods had taken place from the factory at Bahadurgarh in Haryana to
the Head Office at Delhi as an incidence of contract of sale already entered into by the dealer at the Head Office. It is the contract of sale which
had occasioned the movement of the goods.
8. In fairness to Mr. S. P. Jain, learned Counsel for the Applicant/dealer, it may be mentioned that he had brought to our notice two decisions of
the final Court in Kelvinator of India Ltd. v. State of Haryana (1973) 32 STC 629 and Union of India v. K.G. Khosla and Company Ltd. (1979)
43 STC 457., these decisions do not help the learned Counsel, because in both cases there were contracts of sale which fell for interpretation and
on the construction of those documents were based the two decisions. However, in the present case, there is no document which falls for
construction.
9. In the result, we answer the first question in the affimrative and in favour of the Department.
10. Regarding the second question, it is apparent from the record that no ''C forms were produced before the Sales-tax authorities in Haryana.
Only orders of the Sales-tax authorities of Union Territory of Delhi were produced. In the absence of ''C'' forms, the Haryana Sales-tax authorities
were justified in not levying tax at the concessional rate. In the absence of any evidence in the form of ''C forms that the sales had been made to
registered dealers, we hold that the sales effected by the Applicant/dealer were liable to be taxed at the rate of 10 per cent and not 3 per cent.
Thus, our answer to question No. 2 also goes against the Applicant and in favour of the Department.