IMPORTANT POINT
The main legal point established in the judgment is that the nature of the purchase orders and the subsequent sale transactions influenced the court's decision on whether the transactions constituted inter-state sales under the CST Act.

ORDER :

This writ petition is presented with following prayers:

(i) issue a writ of certiorari or any other writ, order or direction quashing the impugned A.Nos.CST/1-6/2016 and CST/9-50/2016 order dated 27.06.2019 at Annexure-A;

(ii) hold that the open purchase orders are not in the nature of 'agreement to sell' and are merely a standing offer which is accepted on receipt of daily requisition for a specific quantity;

(iii) hold that the impugned inter-state movement of goods does not fall within Section 3(a) of the CST Act and is not an inter-state sale and are mere stock transfers;

(iv) any other writ, order or direction as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case and allow this petition with cost.

2. Heard Shri. V.Sridharan, learned Senior Advocate for the petitioner and Shri. Jeevan J.Neeralgi, learned AGA for the State.

3. Brief facts of the case are, petitioner is in the business of manufacture and sale of automotive paints. It is a registered dealer under the provisions of K-VAT Act, Karnataka Value Added Tax act, 2003 - 'K-VAT Act' for short. Its manufacturing unit is situated near Mangaluru in Karnataka. It has warehouses (Branch offices) in Maharashtra, Tamilnadu, Haryana and Uttarakhand.

4. Petitioner manufactures automotive paints for original equipment manufacturers and supplies to Tata Motors, Mahindra and Mahindra, Maruti Udyog Ltd., etc., who procure raw materials on just-in-time (JIT) basis. To cater to their needs, petitioner has developed a business model to ensure that stock is maintained at warehouses located near the factories of OEM Customers.

5. Petitioner's case in substance is, after the product is approved by the customers, petitioner receives open purchase orders. Petitioner transfers the stock to its godowns situated near the customers' manufacturing unit and supplies the paint as and when the indent is received.

6. The Deputy Commissioner of Commercial Taxes passed order dated 16.03.2012 for the year 2006-07 and order dated 14.03.2012 for the year 2007-08 under Section 9(2) of CST Act, [Central Sales Tax Act, 1956, 'CST Act' for short] read with Section 39(2) of the K-VAT Act by accepting the statutory declarations made in Form-F in support of exemption for stock transfers.

7. The Enforcement Officers of Commercial Tax Department inspected petitioner's premises at Mangaluru and the branches situated outside Karnataka. On verification of the documents, the Department came to the conclusion that petitioner was manufacturing automotive paints against specific orders given by the customers and therefore, the Company could identify the customer for whom the paint was required. Accordingly, the Enforcement Authorities recommended reassessment under Section 9(2) of the CST Act read with Section 39 of the K-VAT Act for the tax period April 2006 - January 2011, for the purpose of levy of tax under Section 3(a) of the CST Act.

8. Based on the Investigation Report, the Department issued proposition notices for reopening the assessment proceedings and concluded the proceedings by rejecting 'F- forms' on the Stock Transfer turnover on the ground that Inter-state movement of goods from the manufacturing unit at Mangaluru to various depots in other States was against pre-existing Contract and amounted to Inter-State sale liable to tax under Section 3 of the CST Act.

9. Assessee challenged the reassessment order before the KAT[Karnataka Appellate Tribunal] under Section 18A of the CST Act. The KAT allowed the appeals and remanded the matters for fresh assessment vide order dated 24.04.2015. Petitioner challenged the orders dated 24.04.2015 and 30.10.2015 before the Central Sales Tax Appellate Authority. By the impugned order, the CSTAA[Central Sales Tax Appellate Authority] has confirmed the view taken by the KAT that the sale is an Inter-State sale and dismissed the appeals. The resultant position is, the matter stands remitted to the Assessment Authority.

10. Petitioner has chall