- (1.) LEAVE granted.
(2.) THIS appeal is directed against the order passed by the division Bench of the Orissa High Court dated 11. 4. 2006 whereby the high Court has reversed the finding of the Orissa Sales Tax tribunal. Brief facts which are necessary for disposal of this appeal are that the assessment under the Central Sales Tax Act, 1956 for the years 1976-77, 1977-78 to 1983-84, 1989-90 and 1990-91 was made in respect of assessee, M/s. IDL Industries ( formerly IDL chemicals Ltd.), a company under the Indian Companies Act having its registered office at Kukatpalli, Andhra Pradesh engaged in manufacturing explosive, detonators and accessories and holding licence under the Explosive Act, 1984. It has a manufacturing unit at Sonaparbet near Rourkela in Orissa which is also registered under both Orissa Sales Tax Act, 1947 and the Central Sales Tax Act, 1956 with the Sales Tax Officer, Rourkela I Circle, Rourkela. M/s. IDL chemicals Ltd is a regular supplier of its products to different government undertakings such as the Coal India Limited (hereinafter to be referred to as 'cil'), National Mineral Development corporation, Hindustan Zinc Limited etc. and supplies to these undertakings constituted almost 90 per cent of its total production. CIL placed orders on the appellant for supply of explosive, detonators, accessories etc. for its collieries inside and outside the State of Orissa with a stipulation that delivery should be made against the indent placed by the collieries. The appellant has its consignment agent at different places outside the State. During the assessment years in question the appellant effected supplies through its consignment agents against indents placed by the collieries and for this purpose it claimed to have dispatched the goods to its consignment agents on stock transfer basis otherwise than by way of sale. The contention of the appellant was that dispatches from its factory at Rourkela were stock transfers and were not liable to be assessed to tax under the Central Sales Tax Act as the sales took place when the supplies were made to the collieries against the indents placed by them with their consignment agents. It may be relevant to mention here that the appellant has its consignment agents in various States like Madhya Pradesh, Bihar, West Bengal and maharashtra. All the goods were sent to their consignment agents and from there those goods were dispatched to various collieries of CIL. Therefore, it was not inter-State sale. As against this, it was contended on behalf of the State before the High Court that the supplies were made on account of the order placed by CIL and the movement of the goods from the State of Orissa to outside States was incident of the CIL's order for supply. The transactions were purely inter-State sale from the State of Orissa, as the appellant would not have dispatched the goods outside the State for delivery to the collieries, had there been no order of CIL. It was also contended on behalf of the State that the indents were not contract of sale and that the indents placed by the collieries were simple follow up action of the purchase order of CIL dated 24. 9. 1976. We need not refer to various orders that were placed from time to time by the CIL or otherwise. This matter was taken up by way of reference by the High Court and the following questions of law were referred. " (1) That in view of the quotation offered by the assessee company and supply order issued by M/s. CIL indicating the firm order of rate of payment, quality to be purchased, period of contract etc. on acceptance of the offer, whether the Sales Tax tribunal was correct in law to hold that it was not the contract of sale but the actual purchase and sale was triggered only when a colliery placed indent with m/s. IDL Chemicals? (2) That in view of the fact that M/s. IDL Chemicals moved goods in pursuance to the supply order placed by m/s. CIL, whether the Sales Tax Tribunal was correct in law to hold that the transactions do not constitute sale falling U/s. 3 (a) of the C. S. T. Act ? (3)That in view of the fact that the indents placed by the constituents of M/s. IDL was mere indents to take delivery of the goods, whether the Sales Tax tribunal as correct to hold that the actual sales were triggered by such indents and taken place inside the respective State and were intra-State sale subject to levy of tax under the of that State ?"
(3.) THE basic question which calls for determination is whether the order placed by CIL amounted to sale triggered by CIL order or was an agreement to sell. On 24. 9. 1976 CIL placed order for supply of explosives and detonators to its collieries. This is a crucial document from which it would be clear whether it was an agreement to sell or it was a purchase order on behalf of CIL. The supply of these goods was triggered by the appellant to its consignment agents at various places and from there the explosives and detonators were supplied to the collieries of CIL. Therefore, whether the sale was within the State or the sale was inter-State. This is the only question which has to be answered by us. Mr. GANESH, learned senior counsel for the appellant strenuously urged before us that the order placed by the CIL dated 24. 9. 1976 for various purchases was not a purchase order but it was only an agreement to supply certain quantity of explosives and detonators to various collieries of CIL. There was no firm quantity and it was only approximate and it was subject to change. Therefore, this order was only an agreement to sell and not a sale order. It cannot be said that the goods triggered from Rourkela to various consignment agents in pursuance of the order dated 24. 9. 1976, this cannot be treated as inter-State sale. It was therefore, contended that the finding arrived at by the Sales Tax Tribunal and the Sales tax authorities was finding of fact and the High Court should not have interfered with the matter. In support of that learned senior counsel invited our attention to various decisions of this Court to which we will advert at appropriate stage. As against this, mr. Rakesh Dwivedi, learned senior counsel appearing for the respondent- State of Orissa submitted that the supply of explosives and detonators triggered in view of the order placed by the CIL on 24. 9. 1976 and it was only the modus operandi of supply of all these explosives and detonators to various collieries through the consignment agents of M/s. IDL Chemicals Ltd. . In fact the whole purchase emanated by virtue of the sale order passed on 24. 9. 1976. Therefore, the order dated 24. 9. 1976 should be construed as a sale order, as firm order was passed by the CIL and the goods moved in pursuance of that order only. Mr. Dwivedi also contended that fright were charged on the goods supplied to the collieries and insurance was paid by CIL. Therefore, it was inter-State sale. Before we proceed to examine various contentions referred to by both the sides, let us first examine the nature of the order dated 24. 9. 1976 placed by CIL. The order passed by CIL on 24. 9. 1976 reads as under: JUDGEMENT_1223_TLPRE0_2007Html1.htm The important feature of thisorder is that all the Managers of the collieries in the three States will have to place order with the consignment agents of IDL Chemicals from their depots. This is a modality adopted by the appellant with a view to dispatch their goods from Rourkela to various consignment agents and from there all the collieries of CIL are bound to purchase through their agents mentioned in the order above. Though each colliery has to give its indents for purchase of explosives, detonators etc. as per the requirement but the fixed quantity has been given in the schedule appended to this order. The transit insurance was to be borne by the collieries. The mode of dispatches was also mentioned. It further says that excess supply made, if any, shall be acceptable to the extent of 15% over the quantities against each item in respect of each area as indicated in Schedules I to IV. The price is firm for contract period. Then there is a clause of price variation also. The respective General Managers are to be contacted for month-wise allocation of explosives. IDL Chemicals Limited, and/ or their consignment agents namely M/s. B. P. Agarwalla and Sons (P) Ltd. , p. O. Dhansar, Dist- Dhanbad, (ii) M/s. William Jacks and Co (India)Pvt. Ltd. Asansol/ Calcutta and (iii) Abdul Hussain Mulla Allabuxji, nagpur (Maharashtra), will supply explosives and accessories to mines on the basis of convenience and locations against this order. Mines will follow the existing system of drawing their requirements from IDL and/ or their consignment agents who will raise the bills accordingly and payments will be made by cheques drawn in favour of idl Chemicals Ltd. Instructions contained in the attached Schedule vi should be strictly and invariably followed. Copy of this letter was sent to all over respective collieries. Therefore, what it transpires is that all collieries of CIL were under an obligation to purchase the explosives, detonators etc. from the appellant only through their agents situated in the States of West Bengal, Bihar and Maharashtra and each colliery has been given the quantities of explosives, detonators and detonating/ safety fuses to be purchased from the appellant only at the price fixed. This purchase order was issued from the apex body i. e. the CIL to its subsidiaries i. e. the collieries spreading over these three States. They cannot purchase the goods from any other company other than the appellant. Therefore, this firm order issued by the CIL is in the nature of purchase order specifying the quantities and the price thereof. It was only the convenient mode of supply, instead of sending the goods directly from Rourkela to various States. This convenient device was worked out by the appellant and CIL so that the goods need not directly be sent from the company at Rourkela but would be sent through their agents in various States. This order is definitely a purchase order, the nature of indent and the modalities were agreed, the quantity of the goods to be supplied to various collieries at fixed price was firm, the insurance and freight was to be borne by cil and 98% of the payment was to be made by the collieries of CIL. From these facts it appears that this was a purchase order issued by the apex body, CIL by fixing the price and the quantities to be purchased by their collieries. Various other evidence was produced to show that in fact there was independent transaction with the subsidiaries and the consignment agents of the appellant and the order dated 24. 9. 1976 does not constitute a firm purchase order. But we regret that cannot be of any avail for the simple reason that all supplies were made in pursuance of the order of the CIL. Therefore, that was fountain head from where all supplies followed. If the terms of the order is to be construed as purchase order, then other evidence is secondary and irrelevant. In fact both the parties understood that way only and paid CST for sometime but subsequently discontinued. Therefore, from this it follows that the whole movement of the goods from the factory at Rourkela was triggered in pursuance of the order dated 24. 9. 1976. There was no independent contract by the subsidiaries of CIL with the appellant. The subsidiaries were issuing indents on the agents of the appellant in pursuance of the order dated 24. 9. 1976. In fact the appellant instructed its consignment agents to supply the goods to the collieries as per the indents placed by them. The collieries were also asked by the very same order that they would place their indents to the consignment agents of the appellant on the price fixed in this order and the quantity mentioned therein. Therefore, it is not a case in which there was any independent contract between the subsidiaries of CIL with that of the appellant. It is in pursuance of this order dated 24. 9. 1976 the collieries were placing their indents for supply of the goods and the payment was made on the basis of the terms and conditions fixed in the order dated 24. 9. 1976. Therefore, the goods were moved from the appellant's factory for supply to CIL in pursuance of this order. We need not go into various evidence produced as we are of opinion that the order dated 24. 9. 1976 is a purchase order and in pursuance of this order all the indents were issued by the collieries of CIL and the payment was made as per this order and approximate quantity was fixed by this order. Therefore, it is a purchase order issued by the apex body, CIL and in pursuance of this, indents were placed by the collieries, It was a convenient mode of supply by the appellant instead of directly supplying the goods from the factory. This was not transfer of stock in trade to various branches. Hence, this was a firm order of purchase and the goods were dispatched from rourkela to various consignment agents and from their it was supplied to various collieries.;