TATA ENGINEERING & LOCOMOTIVE CO. LIMITED versus THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES & ANOTHER

Citation: [1970] 3 S.C.R. 862 · Decided: 02-03-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

862 
TATA ENGINEERING & LOCOMOTIVE CO. LIMITED 
A 
v. 
DIE ASSISTANT COMMISSIONER OF COMMERCIAL 
TAXES & ANOTifER 
March 2, 1970 
B 
[J. C. SHAH, K. S. HEGDE, A. N. GROVER, A. N. RAY AND 
I. D. DUA, JJ.] 
Central Sales Tax A.ct, 1956-Trucks maaufactured In Biliar said from 
producer's stockyards in other States-Thoug/J 
agreement u•ith 
dealers 
envisaged fir1n advance orders, actual sales by allocat(o11 froni stockyards-
/I inter-state sa/es--Wltetlzer S.T.O. bound to examine each transaction or 
C 
declde on general basis of silnilar transactions. 
The appellant carried on the business of manufacturing trucks in 
Jamshedpur in the State of Bihar. It did not have any stockyard in the 
State but maintained such stockyards in different States for the purpose cl{ 
effective distribution of vehicles among its dealers. A form of agreement 
between the appellant and its dealers provided that• the company agreed 
to sell and supply from its Works at Jamshedpur or from its stockyanls 
D 
outside the State vehicles to the dealer which would be allotted to 
the 
dealer by the Company at its discretion. In another provision it was laid 
down that by the 15th of each month the dealer shall mail to the company 
his •latements containing firm orders for purchases to be effected during 
the next succeeding month. 
In the course of its assessment to sale< tax for the years 1964-65 and 
1965-66. the appellant claimed that as the demand for the vehicles far ex• 
E 
ceeded the production, no ·firm orders as envisaged in the dealership agree. 
ment had in fact been received. ·The actual procedure followed by 
the 
appellant was that the sales office of the app<:!ant in Bombay, after taking 
into account the production schedule nnd requirements in Jiffcrent States, 
instructed the factory to transfer stocks o'f vehicles to the stockyards in 
the various States by Stock Transfer Authorisations in which the model of 
the chassis and the number of units were mentioned. The stocks availabJe 
F 
in the stockyards were distributed from time to time to dealers taking care 
to ensure that the over-an supply to the dealers in any State \vas in propor .. 
lion to the number of orders pending with the dealer on May I, 1963 or 
on the basis of the off-take by the dealer during the year ending Septem-
her 30, 1961 as required by the Commercial Vehicl"' (Di;tribution and 
Sale) Control Order, 1963. 
For this purpose allotments were made to 
the dealer for each month by an allocation Jetter by the sale• office. It wa; 
claimed that the trans'fer of the vehicles from the factory to the various 
G 
stockyards was a continuous process and was not related to the require¥ 
ment of any particular customer; that there tvas no connection between 
the Stock Transfer Authorisation and the allocation Jetter. It was the stock .. 
yard inchargc \.\'ho appropriated the rt:'quired number of vehicles to the 
contract of sale out of the stocks available with him. This was done after 
a delivery order had been addressed by the sales office at Bomll'ay to the 
;tockyard incharge for delivery of stated number of vehicles of specified 
model to a particular dealer. Till such appropriation of vehicles.. it was 
11 
a1~·ays open to the company to allot anv vehiCfe 
t<' any purchaser or to 
tran!\fer the vehicles from the !itockynrd in one State to a stockyaJd in an· 
other State. 
A 
B 
c 
D 
E 
F 
G 
H 
TATA LOCOMOTIVE co. v. C.C.T. (Grover, /.) 
863 
However, the respondent Assistant Commissioner of Commercial Taxes 
levied tax under the Central sales Tax Act on all the vehicles which moved 
to the stockyards in the States other than Bihar from Jamshedpur. The 
appellant challenged the assessment orders in petitions filed under Article 
226 but these were dismissed by the High Court. On appeal to this Court, 
HELD : The order of the High Court and that df the Assistant Com-
missioner must be set aside. 
(i) The explanation of the procedure followed by the appellant which 
prima facie seemed to be business-like and plausible, together with the 
proved absence of any firm -0rders, indicated that the allocation letters and 
the statements furnished by the dealers did not by themselves bring about 
transactions of sale within the meaning of Section 2(g) of the Central 
Sales Tax Act. It appeared from the material on record that generally 
the oompletion of the sales to the dealers did no: take place at Jamshedpur 
and the final steps in the matter of such completion were take

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