The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that mere existence of pre-existing purchase orders, prior to movement of goods, does not automatically imply that the entire movement constitutes an inter-state sale.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the respondent, CMS Computers had to maintain ample stock at the branch office to fulfill the orders placed by the different customers. The Assessing Officer was obliged to evaluate each transaction involving the transfer of goods before deciding whether to allow or disallow the branch transfer.
The respondent, CMS Computers claims to be a dealer in computer systems and peripherals and also carries out manufacturing, trading, leasing and works contract activity across India.
Against the above disallowance of branch transfers, CMS Computers filed appeals before the State Tribunal under section 18A of the CST Act. The State Tribunal, by a common order dated 22.09.2016, allowed the appeals in respect of two categories of transaction and in respect of the third category of transaction remanded the matter to the Assessing Officer for re-determination of stock transfer in the light of the directions given in the order.
The department contended that when the name of the customer in whose favour the consumables will be used at the branch office is given in the stock transfer note, it clearly implies that the transfer of the consumables to be used in the Annual Maintenance Contract is as a result of a pre-existing order and thus central sales tax has been correctly levied by the Assessing Officer.
The respondent contended that mere transfer of goods from a head office to a branch office or inter-branch transfer of goods which broadly come under the phrase “branch transfers” cannot be regarded as sale in the course of inter- State trade for the simple reason that a head office or branch cannot be treated as having traded with itself or sold articles to itself by means of stock transfers.
The tribunal while dismissing the appeal of the department held that it appropriate to remand the matter to the Assessing Officer to verify the lorry receipts/dispatch proof in respect of each of the transactions. There is, therefore, no infirmity in order passed by the State Tribunal.
Case Details
Case Title: State of Maharashtra Versus M/s. CMS Computers Ltd.
Case No.: Central Sales Tax Appeal No. 01 Of 2017
Date: 03.01.2025
Counsel For Appellant: Rama Ahluwalia
Counsel For Respondent: Rahul S. Thakkar
