M/S. SAHNEY STEEL PRESS WORKS LTD. & ANR. versus THE COMMERCIAL TAX OFFICER & ORS.

Citation: [1985] SUPP. 2 S.C.R. 780 · Decided: 10-09-1985 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

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Judgment (excerpt)

A 
B 
780 
M/S. SAllNEY STEEL A.'ID PRESS 
WORKS LTD. & ANR. 
v. 
THE COMMERCIAL TAX OFFICER & ORS. 
SEPlliMBER 10, 1985 
[R.S. PATHAK AND AMARENDRA NATH SEN, JJ. j 
Central Sales Tax Act, 1950, section 3(a) - Interstate Sales 
-
Goods manufactured according to the specifications received at 
the registered office at Hyderabad and all other activities 
"including that of booking orders, sales despatching, billing and 
c 
receiving of the sale price carried out by the branch offices 
situated outside the State of Andhra Pradesh -
The transactions 
are inter-State sales within the meaning of section 3(a) of the 
Central Sales Tax Act. 
M/s Sahney Steel and Press Works Ltd. is a public limited 
company having its registered office and factory at Hyderabad. It 
D 
is registere.d as a dealer under the Central Sales Tax Act, as 
well as under the Andhra Pradesh General Sales Tax Act. It has 
branch .offices at Amritsar, Bangalore, Bombay, Calcutta, Coim-
batore and Delhi. They are all registered as dealers under the 
Central Sales Tax Act and under the related State Sales Tax Acts. 
The branches of the company are mainly engaged in effecting sales 
E 
and. looking after the sales promotion and liaison work. The 
company 
manufactures 
(a) 
standard 
goods 
according 
to 
the 
company's own designs and specifications, (b) non-standard goods 
according 
to 
the 
designs 
and 
specifications 
supplied 
by 
customers. In the course of its normal business, the registered 
off ice despatches both standard and non-standard goods 
manu-
F 
factured at the Hyderabad factory to the branches. The branch 
offices situate at Bombay, Calcutta and Coimbatore receive orders 
from customers within and from outside the respective States for 
the supply of goods conforming to definite specifications and 
drawings. Those branch offices then advise the registered office 
at Hyderabad to manufacture and despatch the goods. On receipt of 
G 
such advice from the branch, the goods are manufactured at the 
Hyderabad factory and thereafter despatched by the registered 
office to the branches by way of transfer of stock. While 
despatching·the goods, sometimes intimation is alao given by the 
registered office to the customer concerned about the despatch of 
the_ gooda to the destination indicated by him. Snch gooda 
are 
H 
SAHNEY STEEL WORKS v. COMMERCIAL TAX OFFICER 
781 
booked to 'self' and seat by lorries. The goods received by the 
A 
branches 
from 
time 
to 
time, 
whether 
standard 
goods 
or 
non-standards goods, are entered in tha stock accounts of the 
branches and are kept in s toe\« by the .branches for ultimate 
deli very to the customers. On the goods reaching the branches, 
they are inspected by the custOillers and accepted by them where 
the customers are local parties. Where delivery has to be 
B 
effected to customers of other States, the goods are despatched 
to them by the branch. The branches·raise biils and receive the 
sales price. The branches furnish 'F'' forms to the registered 
off ice under section 6-A of the Central Sales Tax Act in the case 
of stock transfers to the branches. 
The sale of non-standard goods was assessed to State Sales 
Tax under the Sales Tax Acts of Maharashtra, West llellgal and 
Tamil Nadu. 
The Commercial Tax Officer, Company Circle-II, 
Hyderabad, however, expressed the view that the company was 
liable to Central Sales Tax on the turn over of non-standard 
c 
goods. For the assesSl!lellt year 1979-80 he made an assessment 
D 
order 
dated 
May 
4, 
1981 
assessing a 
turn over of Rs. 
l,29,50,248.73 representing what :the petitioners claimed to be 
stock transfers from ·the ·Hyderabad registered office to the 
branches outside the Stste. of Audhra Pradesh. By way of abundant 
caution the petitioners had prayed that in the event of their 
objection to the imposition of Central Sales Tax being overruled 
they should be allO'ied time to collect 'C' forms from the various 
E 
customers to whom the branches had effected sales and to submit 
them to the Commercial Tax Officer. The Commercial Tax Officer, 
hi>wever, did not grant the company the further time it sought for 
that purpose. The Commercial Tax Officer has also issued notices 
dated May 2, 1981 seeking to reopen the Central Sales Tax Assess-
ments already completed for the years 1977-78 and 1978-79. In the 
F 
original assessments for those years the Commercial Tax Officer 
had excluded the disputed transactions relating to transfers of 
·

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