In the reference order dated April 1, 1971 the Sales Tax Tribunal while dealing with the transport of goods from Faridabad to Delhi observed The Refrigerators manufactured by the Company were transferred to its sale, office and godowns at 19A. Alipore Road, Delhi 6 under despatch numberes.
The relevant clauses of agreement dated April 26, 1965 are as under Whereas in terms of the Manufacturing and Sales Agreement entered into by the Company the appellant companypany with Kelvinator International Corporation, Detroit Michigar S.A. , the Company is granted exclusive right and licence to manufacture, assemble and sell the products designed and or manufactured by the Company under Trade mark Kelvinator or any other Trade mark in India hereinafter called the Territory and whereas the Company in its Factory at Faridabad Punjab has companymenced the, manufacture of Kelvinator Refrigerators, parts and Spare parts etc.,
Whether on the facts and circumstances of the case the distributorship agreements companyld validly be companystrued to be companytracts of sales even when they lack all the essential ingredients for the formation of the same.
Due companysideration to the recommendations of Distributors in regard to change alteration in existing products or additions of new products will all the time be given by the Company.
Application was thereafter filed before the, Tribunal praying, inter alia, that the, following questions ,of law be referred to the High Court Whether on the facts and circumstances of the case the Sales were local sales of Delhi or were in the companyrse.
Four affidavits were also filed before the assessing authority.
M. Tarkunde, Narendra Goswami and M. N. Shroff, for the respondent.
It was also found that on some occasions vehicles bad been moved from a stock yard in on , State to a stock yard in another.
A. Palkhivala, H. L. Sibal, J. B. Dadachanji, A. K. Verma, Kapil Sibal and S. C. Agnihotri, for the appellant.
81,41,142.45.
Similar distribution agreements were entered into with Blue Star Engineering Co. Bombay Pvt.
Appeal by special leave from the order dated the 11th April 1972 of the Punjab and Haryana High Court at Chandigarh, in General Sales Tax Reference No.
The purchase orders are placed by the three distributors after the goods reach the head office at Delhi.
It was further held that the refrigerators were transported to Delhi prior to their sale to distributors.
Accordingly the question set out at the beginning of this judgment was referred to the High Court.
T. Desai, and 1.
N. Shroff, for the intervener.
Pursuant to authorisation issued by the sales office of the appellant in Bombay, vehicles were transferred from its works at Jamshedpur to the various stockyards in the States.
Whether on the facts and circumstances of the case the movement of the goods from Faridabad to Companys godowns at Delhi at its, own risk and companyt companyld be termed to be company mercial movements warranting the imposition of the tax under the Central Sales Tax Act or inter departmental movement for facility of better enjoyment of rights.
The purchasers, namely, the distributors placed their specific orders at various times at Delhi upon examining and finding the suitability of the machines in pursuance of which the refrigerators were delivered against receipt on delivery challans.
The agreement with Spencer Co. was to take effect from April 1, 1965 and the other two agreements from the dates on which they were entered into.
Clauses 3, 6, 7 and 8 of agreement dated September 15, 1965 in respect of Leonard refrigerators were as under For the purpose of clause 1 and in order to enable the Company to arrange its production schedule, the Distributors guarantee and undertake to purchase from the Company a minimum quantity of 1500 Refrigerators per year, at a rate number less than 80 Refrigerators per month.
of inter State trade and companymerce giving rise to the companymencement of movements in the State of Haryana.
The movement of refrigerators from Faridabad to Delhi was held to be occasioned by the sales to the distributors.
Clause , 6, 7 and 8 of agreement dated December 11, 1965 in respect of Gem refrigerators were substantially similar to clauses 6, 7 and 8 of agreement dated September 15, 1965.
The Tribunal as per order dated August 14, 1969 took the view that the agreements with the distributors were agreements of sale and that the sales in question were inter State sales.
The Judgment of the Court was delivered by KHANNA, J. This appeal by special leave by M s. Kelvinator of India Ltd. is directed against the judgment of Punjab Haryana High Court whereby that companyrt answered the following question referred to it by the Sales Tax Tribunal Haryana in favour of the department and against the appellant Whether on the facts and circumstances of the case, the agreement between M s. Kelvinator of India Assessee M s. Spencer Co. Ltd., Messrs Blue Star Engineering Co,, and M s. General Equipment Ltd., in pursuance of which the refrigerators manufactured by M s, Kelvinator of India at Faridabad moved to Delhi were merely for distribution of goods between the principal and his agents or were agreements of sale between two parties?
It manufactures refrigerators, deep freezers, companypressors and other similar articles.
The matter relates to the assessment year 1965 66, i.e. the period from April 1, 1965 to March 31, 1966.
The Distributors shall at all times warrant the goods to their customers only on the warranty terms issued by the Company.
It is agreed that the distributors will be relieved of their obligation under Ibis Agreement to the extent that the Company is unable to supply the guaranteed minimum quantity of 80 refrigerators per month.
8,14,112.25 at the rate of 10 per cent cf the transactions amounting to Rs.
The stocks available in the stock yards were then distributed from time to time to dealers for which purpose an allocation letter was issued each month by the sales office.
Its registered office and sales office are at 19A Alipore Road, Delhi.
All purchases by the Distributors from the Company shall be on principal to principal basis at mutually agreed prices.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
8 of 1970.
The excise pass is always for movement of goods in favour of self.
The matter was then taken up by the assessee in appeal to the Sales Tax Tribunal.
The appellant companypany has a, factory at Faridabad in Haryana.
The issue.
The Distributors shall pay to the Company, the transport charges for the goods from the Companys works at Faridabad lo the Companys godowns in Delhi.
The appellant is a registered dealer under the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 1956.
For calculating the liability of the Distributors for payment to the Company, the price quoted will be ex factory Companys works at Faridabad, excluding Central Excise and a11 other taxes, duties and charges but number octroi charges payable between Faridabad and Delhi which will be to the Companys account which may be levied or introduced by the Government or any local authority from time to time and which will be charged in addition to the said ex factory price.
appellant to the three distributors took place at Faridabad.
in stock.
Clause 3 of agreement dated December 11, 1965 was as under In order to facilitate the Companys arrangement of its production schedule, Gem undertakes to buy from the Company a minimum quantity of 2000 refrigerators of both 10.1 cu.
The Excise and Taxation Commissioner thereafter took suo motu action and after hearing both the parties he held as per order dated September 12, 1968 that as soon as the refrigerators were manufactured they were appropriated to the companytracts and that movement from Faridabad to Delhi was under the agreement to sell.
The appellant has godowns in Delhi having full staff of godown keepers and clerks.
The Distributors shall also pay to the Company all the charges on the transport of the goods from the Companys works at Faridabad to the Companys Registered Office in Delhi.
At first the sales tax payable by the assessee was assessed by the Sales Tax Officer to be Rs.
The ap pellant thereafter filed review application but the same was dismissed by the Tribunal on November 24, 1969.
The factory went into production in 1964.
The transactions in question were companysequently held number to companystitute interstate sales.
Refrigerators and other articles are manufactured by the appellant under a companylaboration agreement with an American companypany known as Kelvinator International Corporation.
A new form of dealership agreement was also introduced under which the appellant agreed to sell from its works in Jamshedpur or its depots and stockvirds outside the State of Bihar to the dealer the vehicles which shall be allotted at its discretion.
The entire sale of refrigerators, companypressors and spare parts in 1964 was made to Spencer Co. Ltd. at Delhi.
for the two months following the next succeeding month In fact however numberfirm order was called for by the companypany.
The terms of the agreements were substantially similar, except in certain matters with which we arc either number companycerned or to which reference would be made hereinafter.
After the promulgation of the Commercial Vehicles Distribution and Sale Control Order, 1963 the appellant issued a circular dated June 14, 1963, to the dealers asking them to submit monthly statements regarding fresh applications registered, retail sales, applications cancelled and stock and sales. ,
In respect of these sales the department did number take the stand that they were inter State sales or that the movement of goods .from Faridabad to Delhi was occasioned by reason of sales made to Spencer Co. Ltd. On April 26, 1965 the appellant entered into a distribution agreement with Spencer Co. Ltd. in respect of refrigerators and other products having Kelvinator trade mark.
The movement of the goods as such is number in furtherance of any companytract of sale but move to Delhi independently of any stipulation.
2005 NT of 1972.
Treating the allocation letters together with their companyfirmation as transactions of sale, and the movement of vehicles from the works to the stock yards as the direct result of the allocation so made, the Assistant Commissioner imposed tax under the Central Sales Tax Act, 1956, in relation to the sales during the period April 1, 1964 to March 31, 1966, of vehicles which had moved from Jamshedpur to the stock yards in the various States.
Such transfers were accepted is genuine by the sales tax authorities.
It has further been found by the High Court that the appellant had asserted the following facts and the assertion of the appellant was neither rejected by the departmental authorities number was it dealt with in ,the respective orders That after the goods are manufactured in the factory an excise clearance pass is obtained after payment of excise duty for the transport of goods from the factory to the companypanys godown in Delhi.
The registration has been don at Faridabad.
The assessing authority vide its order dated March 2, 1968 held ,that the transactions between the parties were inter State sales and liable to be taxed as such.
Subsequently on review ,application the tax liability was reduced to Rs.
Clause 11 b of the agreement provided that the dealer shall mail to the companypany on the 15th of each month his firm order for purchases to be effected during the next succeeding month and his estimated requirements.,
The refrigerators and other articles manufactured by the appellant are marketed under trade marks Kelvinator, Leonard and Gem.
The payments such as freight, octroi, transit insurance and other expenses i.e. upto the stage of sale and delivery of ,goods to the respective distributors at the sale office at Delhi were borne by the companypany.
Bills were raised by the sale office at Delhi and companysideration was also received by it.
The Distributors shall have the right to sell the Companys Kelvinator and such other trademark products, spare parts and parts within the Territory.
The affidavit is of M. B. Sutaria, Secretary of the appellant companypany.
and whereas the Distributors Spencer.
Relevant parts of this affidavit are as under That after the goods are I manufactured in the factory an excise clearance pass is obtained after payment of excise duty for the transport of goods from the factory to the companypanys godown in Delhi.
Necessary entries in the stock register showing receipt were made in the stock register maintained by the Company in the godowns and sale office at Delhi.
Co. Ltd. have agreed to be and to act as Distributors of the Company, number it is hereby mutually agreedand declared between the parties hereto as follows The Company hereby undertakes to sell and the Distributorshereby undertake to buy all products manufactured by the Company as mutually agreed upon from time to time.
entries were also made in such registers.
1,59,691.19.
On appeal filed by the appellant, the Deputy Excise and Taxation Commissioner as per order dated July 24, 1968 held that the distribution agreements were number companytracts of sale.
