LexM/S. DCM LIMITED versus COMMISSIONER OF SALES TAX, DELHI
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[2009] 3 S.C.R. 512 A M/S. DCM LIMITED ~ ' v. COMMISSIONER OF SALES TAX, DELHI (Civil Appeal No. 1323 of 2009) B FEBRUARY 27, 2009 • [S.H. KAPADIA AND H.L. DATIU, JJ.] Central Sales Tax Act, 1956: s.3(a) - Inter-State sales - >- :I Delivery of goods taken in Delhi by the purchasing dealers c for their assigned territories outside Delhi amount to inter-State sales. The question which arose for determination in these appeals was whether the taking of the delivery in Delhi D by the purchasing dealers for their assigned territories • outside Delhi would take away the transactions in question from the category of inter-State sale. Dismissing the appeals, the Court E HELD: 1. Taking of delivery in Delhi by the purchasing dealers for their assigned territories outside Delhi would not take away the transactions in question from the category of inter-State sales. The determinative .. test to be applied in such case is whether the purchasing • F dealers were obliged contractually to remove the goods from Delhi, in which they were bought, to the assigned .... territories and whether in fact the goods stood actually removed. This test would decide the question as to whether the sales in question were "inter-State sales" or G "local sales". [Para 15] [522-H; 523-A, B] 1.2. The perusal of the contract shows that each ;.,- purchasing dealer was assigned an exclusive territory. Each dealer was obliged to take the chemicals to his respective territory outside Delhi where they were to be H 512 DCM LIMITED v. COMMISSIONER OF SALES TAX, 513 DELHI __, • sold. Despite the fact that the delivery of the goods was A taken in Delhi, the purchasing dealer had to move the goods to the respective assigned territories outside Delhi and it was the essential condition of the contract itself that the chemicals would move out of Delhi and would be sold in the assigned territories allotted to each of the B respective purchasing dealers. The covenant in the Contract obliged each of the purchasing dealers to move .... the goods to the territories outside Delhi. In fact in clause 3 there was a proviso that if on instructions from the purchasing dealer, the assessee was required to c transport the goods, the freight charges would have to be paid by the distributor as a purchasing dealer and that the purchasing dealer would also be liable for sales tax. No evidence was led by the assessee as to the exact -+ quantity of chemicals which stood removed under this D clause and the reimbursement, if any, of tax and freight being made to the assessee. Clause 7 of the Contract also indicates that the chemicals were to be sold in the territories outside Delhi. The assignment of specific territories is indicated in clause 1. Under the Contract, the E purchasing dealer was required to submit monthly stock of sales to the assessee. Every month, the purchasing ... dealer was required to submit a market report to the -l, assessee. Under the contract, the price at which the chemicals were to be sold in different territories was also fixed by the assessee. Each purchasing dealer had F executed separate contract(s) with the assessee. Thus, movement of the goods was the covenant of the Contract. The sale of chemicals effected by the assessee. to its purchasing dealers who in turn were obliged to effect their sales in their respective territories outside Delhi G .... ,.. involved inter-State movement of goods and, therefore, the sales in question were inter-State sales. Accordingly, there is no infirmity in the concurring findings of fact recorded by the Authorities below. [Para 15] [523-CH; 524- A-C] H 514 SUPREME COURT REPORTS [2009) 3 S.C.R. A 1.3. It is found that the purchasing dealers were obliged under the Contract(s) to take the chemicals to their respective territories outside Delhi. The purchasing dealers were obliged to sell the chemicals in their respective assigned territories, and the said purchasing B dealers were obliged to enter into separate contracts with the assessee. Each of the purchasing dealers were required to sell the chemicals in their assigned territories at the price fixed by the assessee and submit monthly reports to the assessee. In such an event the mode in c which each of the purchasing dealers could sell their goods either by way of stock transfer or inter-State sale or rocal sale becomes irrelevant. The obligation of the purchasin
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