As sales were intra sales, thus petitioners held liable to pay tax, HC

Facts in Brief:

1. The facts, which are common, in brief, for disposal of this batch petitions, are that the petitioners are dealers of tendu leaves, registered as `exporters of tendu leaves'. A tender notice was issued by the respondent - Chhattisgarh State Minor Forest Produce (Trading & Development) Co-op. Federation Limited (for short "the Federation").

2. Pursuant to the said tender notice, the petitioners submitted their tender forms for purchase of tendu leaves. On consideration of the tender forms, the petitioners were allotted various tendu leaves lots.

3. Thereafter, purchase agreement under condition No.7 of the tender notice was executed between the Governor of Chhattisgarh acting through the Conservator of Forest, ex officio General Manager of the Federation. The petitioners were required to pay taxes under the terms of the purchaser's agreement. Thus, these petitions.

4. Shri Rajesh Ranjan Agrawal, learned counsel appearing for the petitioners in W.P. No. 2060 of 2002, W.P. No. 393 of 2003, W.P. No. 218 of 2004, W.P. (T) No. 4646 of 2009, W.P. (T) No. 4900 of 2009 and W.P.(T) No. 4902 of 2009, would submit that the petitioners are registered as exporters under the provisions of the Adhiniyam, 1964 and the Niyamavali, 1966. In addition, they are registered dealers under the State Sales Tax as well as the Central Sales Tax (for short "CST").

5. Shri Agrawal would further submit that the petitioners are under obligation to export tendu leaves to its manufacturing units situated in State of West Bengal and State of Jharkhand. Thus, the sale comes within the meaning of inter-state sale, as provided under Section 3 (a) of CST. The agreement of goods was inevitable, as they were registered exporters.

6. The sale of tendu leaves and movement of tendu leaves to outside State of Chhattisgarh are inseparably connected, as it was a sale by acceptance of tender and subsequent agreement between the petitioners and Federation.

HC held as under,

7. The facts involved in this batch of cases came within the illustration as case No.3 in Balabhagas Hulaschand (supra), as in the cases on hand, the petitioners, registered as dealers in other States, have purchased tendu leaves in State of Chhattisgarh and thereafter, the tendu leaves were taken out to other States. This is purely an internal sale and the movement of goods is not occasioned by the sale but takes place after the property is purchased. After the tendu leaves are purchased by the petitioners, the same become their property.

8. For the reasons and analysis aforestated, unhesitatingly, I hold that the purchase of tendu leaves was an independent transaction, which was complete in the State of Chhattisgarh. Movement of tendu leaves thereafter was a different transaction and independent of the contract of sale. There is no link between the contract of sale and movement of leaves from State of Chhattisgarh to outside the State of Chhattisgarh. Further, the movement of leaves to outside State of Chhattisgarh was not occasioned by sale of tendu leaves, as it was not on account of covenant of the contract of sale. Thus, the sales are intra-state sales. The petitioners are liable to pay all the taxes accordingly under the provisions of the State Acts. All the interim reliefs granted earlier stand vacated. The petitioners are accordingly directed to make payment of balance amount of taxes to the respondent State, as aforestated.

9. In the result, all the writ petitions are liable to be and are hereby dismissed.

Case Reference - M/S Shyam Biri Works Ltd & Others vs The State Of Chhattisgarh & Others.