Inter-State movement of goods should spring from the terms of the contract of sale or purchase or be incidental thereto to be considered as inter-State purchase.

KUMARAYYA, A. C. J.

( 1 ) THE short point that falls for determination in this Revision Petition filed against the order of the Sales Tax Appellate Tribunal is whether the Tribunal was right in holding that the disputed turnover of rs. 8,27, 382-24 representing purchases of cotton is of inter-State purchase and hence exempt from tax under the Andhra Pradesh General Sales Tax Act.

( 2 ) THE facts so far as necessary for our purpose may be shortly stated. The assessee is the Andhra Co-operative Spinning Mills Ltd. , Guntakal. It entered into written contracts for purchases of cotton in relation to most of the disputed purchases with M/s. Patel Cotton Co. , (Private) Limited, Bombay, and in one case with m/s. Narondas Ranchoddas and Sons, Adoni. Patel Cotton Co. , has its head office at Bombay where the said contracts purports to be executed. These contracts are on printed forms and have been entered into subject to the bye-laws of the East india Cotton Association, Ltd. According to some of the express terms of the contract, the cotton agreed to be supplied is of Bellary Western Farm Cotton as per sample. Its delivery has to be made at Guntakal and is f. o. r. Free Mail Delivery, guntakal. The despatch of goods is subject to wagons being available and payment of full invoice amount has to be made against delivery of the bales at the mills.

( 3 ) THE contracts specifically refer to the fact that price includes Central Sales Tax at 1 per cent, and buying commission at 1/4 per cent, and any change in Central Sales tax rate will be to the buyer s account. As per the bills it is evident that the goods were despatched from Bellary a place outside the State, to Guntakal, a place within the State of Andhra Pradesh, where the Mills of the assessee are situate. They were sent by the suppliers to the Mill premises. After the goods were delivered, they were weighed and bills were prepared and payments received. It is common ground that all other goods connected with the disputed turnover also had to be moved from places outside the State to the Mills within the State. In these circumstanes, they claimed exemption on the ground that these sales were inter-State sales. But the assessing authority held otherwise and brought the disputed turnover to tax on the basis that they were purchased in the State. The grounds for this conclusion were that Patel Cotton Co. , which has its head office at Bombay, has its branch office in Guntakal as well and the accounts of the purchases and invoices maintained by the assessee-company show that the purchases were effected from Patel cotton Co. , Guntakal. The sale bill issued by Patel Cotton Co. , to the assessee refers both to General Sales Tax and Central Sales Tax registration numbers. In asmuch as the goods were delivered at Guntakal and the price was paid there, it was held that they were intra-State and not inter-State sales. The plea of the assessee that Patel Cotton Co. , which has its vaiious branches all over the country, including the Guntakal branch have their head office at Bombay and the orders are received through their branch offices by the Head Office, which makes purchases and moves the good to places of destination to be delivered through their branch offices, and that such transactions arc within the description of inter-State purchases did not find favour with the assessing authority and also with the appellate authority. But the Appellate Tribunal held that they were inter-State purchases as the movement of goods to this State from outside the State was in fulfilment of the subsisting contracts of sale entered into with the assessees. This movement, according to the tribunal, was incidental to the contract of sale and therefore, the sales were inter-State sales, at the hands of Patel Cotton Co. , in all cases except one, viz. , Narondas ranchoddas sons, and such purchases cannot be treated as local purchases liable to be taxed under the Andhra Pradesh General Sales Tax Act.

( 4 ) NOW t

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