NATIONAL ALUMINIUM CO. LTD.versusTHE STATE OF A.P. & ORS.

                                 [2008] 3 S.C.R. 55
     .;-


                        NATIONAL ALUMINIUM CO. LTD.                       A
                                         V.
                          THE STATE OF A.P. & ORS.
,.                       (Civil Appeal No.1416 of 2008)
                              FEBRUARY 19, 2008
                                                                          B
               (DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.)

               Central Sales Tax Act, 1956; Section 4(2)/Andhra
           Pradesh General Sales Tax Act, 1956:
                 Levy of sales Tax on sale of goods - A Government        c
           company exporting aluminium/goods through a Port in Andhra
           Pradesh earning duty entitlement under Duty Entitlement Pass
           Books (DEPBJ Scheme - Auction of entitlement under the
           Scheme from its corporate office in Orissa - Selling of
           entitlement to highest bidder treating the sale as inter-State D
           sale paying Central Sales Tax to the State of Orissa - Levy of
           sales tax by assessing authorities in State of Andhra Pradesh
           - Correctness of - Held: Issue before the Sales Tax Tribunal
           was limited to determination of the question as to whether any
           sale took place within the State of Andhra Pradesh - There E
           was no material placed before the Tribunal to come to a definite
           finding that the sale could be treated as intra-State Sale within
           the State of Orissa - Such conclusion by the Tribunal
     ~
           unsustainable though Tribunal was right in holding that there
           was no intra-State sale which took place within the State of F
'          Andhra Pradesh.
                Appellant is a Government Company having its
           corporate office at Bhubaneshwar in Orissa and
           mercantile office at Visakapatnam, Andhra Pradesh.
           Appellant alleged that there was no sale or .purchase of G
           goods carried out by them· in the State of Andhra Pradesh;
           that they would earn Credit under Duty Entitlement Pass
           Book (DEPB) licence as contemplated under Exim Policy
           as a result of their export from its mercantile office at
                                       55                             H
    56       SUPREME COURT REPORTS               [2008] 3 S.C.R.


A Visakhapatnam Port; that since the exports were effected
  at Visakhapatnam Port, an account of DEPB licenses was
  maintained by the customs authority at Visakhapatnam.
  Against such exports, the petitioner got some import duty        -
  entitlement under the DEPB scheme. They held open
B auctions of these entitlements from the Head Quarters at
  Bhubaneswar. In those auctions the bidders from other
  States emerged as the highest bidders. Accordingly, the
  appellant sold the import duty entitlement under the DEPB
  Licenses to the highest bidders and treating the same as
c inter-state sale, collected and paid CST to the Government
  of the exporting State i.e., Orissa. The Assessing
  Authorities in Andhra Pradesh issued show cause notice
  proposing to levy tax under the Andhra Pradesh General
  Sales Tax Act, 1956 on the transactions relating to transfer
  of the DEPB Licenses on the ground that such licenses
0
  were registered with Visakhapatnam Port through which
  the export took place. By the impugned common
  judgment, the Tribunal decided the matter in favour of the
  appellant holding that the sale did not take place within
  the State of Andhra Pradesh. But held that it took place
E inside the State of Orissa as per Section 4(2) of the Central
  Sales Tax Act, 1956. Hence the present appeals.
       Appellant contended that the Tribunal could not have
  recorded a finding that there was an intra-state sale within
F the State of Orissa; and that there was no sale involved
  to attract levy of any sale tax. But without any material it
  held that there was an intra state sale within the State of
  Orissa, the Tribunal could not have come to such a
  conclusion.
G        Respondent-State of Andhra Pradesh submitted that
    the Tribunal has decided the basic issues that there was
    no sale within the State of Andhra Pradesh, but on the
    facts came to a tentative conclusion about this intra-state
    sale in the State of Orissa.
H
     ...           NATIONAL ALUMINIUM CO. LTD. v. THE STATE OF           57
            ;-
                                   A.P. & ORS.
                      Partly allowing the appeals, the Court                  A
                      HELD: 1.1 It is clear that the scope of consideration
                 before the Tribunal was very limited as to whether any
 1
     '           sale took place within the State of Andhra Pradesh.
                 Having decided that issue, Tribunal was not required to
            .l   go into any other question particularly when the relevant B
                 factors were not before it. (Para - 7) [60-G; 61-AJ
                      1.2 There was no material whatsoever to show that
                 the sales could be treated as intra state sale within the
                 State of Orissa. The assessing authorities proceeded to      c
                 levy tax on erroneous premises. In the ultimate analysis
                 the Tribunal held that the sales did not take place within
                 the State of Andhra Pradesh. The conclusions to the effect
                 that they are intra-state sales in the State of Orissa are
                 unsustainable. (Para - 7) [61-A, BJ
                                                                              D
                      1.3 It was rightly decided by the Tribunal that there
                 was no intra-State sale within the State of Andhra Pradesh.
                 But for further conclusion that there was an intra state
                 sale within the State of Orissa, materials were required to
                 be examined. That has not been done. There was no E
                 material before the Tribunal to come to a definite finding,
                 as done, that the transaction should be treated as intra

           -     state sale within the State of Orissa. (Para - 7) [61-B, C, DJ
                      CIVILAPPELLATE JURISDICTION : Civil Appeal No. 1416
                 of 2008                                                      F

                      From the final Order dated 19/5/2006 of the Sales Tax
                 Appellate Tribunal, Andhra Pradesh, Hyderabad in TMP No.
                 125/2005.
'·
                                           WITH                               G
                     Civil Appeal Nos. 1417, 1418 and 1419 of 2008
           ..        Goolam E. Vahanvati, S.G., P.K. Manohar and Ashok
                 Kumar Gupta for the Appellant.
                                                                              H
    58        SUPREME COURT REPORTS                   [2008] 3 S.C.R.


A        H.S. Gururaja Rao, Manoj Saxena, Rajneesh Kr. Singh,
    Rahul Shukla, TV. George, Janaranjan Das and Swetaketu
    Mishra for the Respondents.
                                                                         1•
         The Judgment of the Court was delivered by

B        Dr. ARIJIT PASAYAT, J. 1. Leave granted.
         2. Challenge in these appeals is to certain conclusions
    recorded in the order passed by ti1e Sales Tax Appellate Tribunal,
    Andhra Pradesh, Hyderabad (in short the 'Tribunal') in TMP
    Nos.125 of 2005, 259/2005,260/2005 and 26112005.
c
         3. Background facts in a nutshell are as follows:

        National Aluminium Co. Ltd. is a Government of India
  enterprise under the administrative control of the Ministry of
  Mines. The registered and corporate office of the appellant is
D situated at Bhubaneswar in Orissa State, while it has mercantile
  offices in a few cities including Visakhapatnam. The substantial
  part of the commercial operations of the appellant are carried
  out only in the State of Orissa. For the purpose of causing export
  to foreign countries, Visakhapatnam port is being used by the
E appellant. It is the case of the appellant that there is no sale or
  purchase of goods carried out by it in ·the State of Andhra
  Pradesh.

         It is also the case of the appellant that they would earn
  Credit Duty Entitlement Pass Book (DEPB) licence as
F contemplated under Exim Policy as a result of their export. For
  the period from 1.4.1997 to 31.3.2001, the Duty Entitlement
  Pass Book scheme was there. The object of the scheme was
  neutralization of incidence of customs duty on the import content
  of the export product. Such neutralization was provided by way
G of grant of duty credit against export product. The export unit
  has also been conferred with the right to utilize the said credit
  for its own purpose or to transfer of the same to third parties for
  availment of the benefit of the said credit.
          For the exports made by the appellant from
H
  NATIONAL ALUMINIUM CO. LTD. v. THE STATE OF                        59
            A.P. & ORS. [PASAYAT, J.)

Visakhapatnam Port, the petitioner submits an application for A
issue of DEPB to DGF'I', Cuttack, Orissa along with customs
endorsed copy of shipping bill. The customs authorities check
the details of exports mentioned in the DEPB with their records,
register the license and return the original license to the
appellant. It is also the case of the appellant that since the exports s
of the appellant are effected at Visakhapatnam Port, an account
of DEPB licenses is maintained by the customs authority at
Visakhapatnam.
      The appellant either uses DEPB licence for payment of
customs duty for their own import or sells the surplus DEPB C
license by inviting advertisement. As per the terms, the DEPB
license entitles the holder of such license to import through any
port in the country. Accordingly, the appellant had been exporting
aluminium through Visakhapatnam Port in Andhra Pradesh.
Against these exports, the petitioner got some import duty D
entitlement under the DEPB scheme. It held open auctions of
these entitlements from the Head Quarters at Bhubaneswar in
Orissa State. In those auctions the bidders from West Bengal
and Maharashtra emerged as the highest bidders. Accordingly,
the appellant sold the import duty entitlement under the DEPB E
Licenses to the highest bidders and treating the same as inter-
state sale, collected and paid CST to the Government of the
exporting State i.e., Orissa.
      The Assessing Authorities in Andhra Pradesh issued show
cause notice proposing to levy tax under the Andhra Pradesh F
General Sales Tax Act, 1956 on the transactions relating to
transfer of the DEPB Licenses on the ground that such licenses
were registered with Visakhapatnam Port through which the
export took place. The authorities considered it to be local sales
within Andhra Pradesh and accordingly levied tax.                  G
      The appellant filed appeals before tri~ c . :; : 1\ three-judge
judge Bench by order dated 151 Februa1y :<. ...::s 1n Civil AppPci 1
Nos. 1649-1654 of 2001 directed t: it.. •... :· h b<:: :-:onsrrl< "d
by the Tribunal for determining the '                      r·.- .;; ·:o\v
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    60        SUPREME COURT REPORTS                    [2008] 3 S.C.R.


A the Tribunal took up the matter for consid1::ration. By the
  impugned common judgment, the Tribunal decided the matter
  in favour of the appellant holding that the sale did not take place
  within the State of Andhra Pradesh. But held that it took place
  inside the State of Orissa as per Section 4(2) of the Central
B Sales Tax Act, 1956 (in short the 'CST Act'). The ultimate
  conclusion which is the subject matter of challenge in these
  appeals reads as follows:

         "In the light of the discussions, we hold that the sales took
         place within the State of Orissa and not within the State of
C        Andhra Pradesh and as such it should be treated as intra-
         state sale within the State of Orissa and not intra-state
         sale within Andhra Pradesh."
        4. It is the stand of the appellant in these appeals that the
  Tribunal could not have recorded a finding that there was an
0
  intra-state sale within the State of Orissa. That was not the subject
  matter of dispute before the Tribunal. Strictly speaking there was
  no sale involved to attract levy of any sale tax. But without any
  material to hold that there was any sale involved and that too an
  intra state sale within the State of Orissa, the Tribunal could not
E have come to the impugned conclusion. It is contended that
  Central Sales tax has been deposited in the State of Orissa in
  respect of the transaction, though legally no tax was payable.
          5. Learned counsel for the State of Andhra Pradesh
F   submitted that the Tribunal has decided the basic issues that
    there was no sale within the State of Andhra Pradesh. But on
    the facts came to a tentative conclusion about this intra-state
    sale in the State of Orissa.
        6. Learned counsel for the State of Orissa submitted that
G the Tribunal's conclusions do not suffer from any infirmity.
  According to him, there may be a typographical error i.e. intra-
  state sale in place of inter-state sale.
       ·1. It is clear that the scope of consideration before the
H Tribunal was very limited as to whether any sale took place within
  NATIONAL ALUMINIUM CO. LTD. v. THE STATE OF                 61
            A.P. & ORS. [PASAYAT, J.)
the State of Andhra Pradesh. Having decided that issue, Tribunal A
was not required to go into any other question particularly when
the relevant factors were not before it. As rightly contended by
the appellants there was no material whatsoever to show that
the sales could be treated as intra state sale within the State of
Orissa. The assessing authorities proceeded to levy tax on B
erroneous premises. In the ultimate analysis the Tribunal held
that the sales did not take place within the State of Andhra
Pradesh. The conclusions to the effect that they are intra-state
sales in Orissa are unsustainable. It was rightly decided that
there was no intra- state sale within Andhra Pradesh. But for c
further conclusion that there was an intra state sale within the
State of Orissa, materials were required to be examined. That
has not been done. There was no material before the Tribunal
to come to a definite finding, as done, that the transaction should
be treated as intra state sale within the State of Orissa. The
                                                                    0
observations, therefore, have no relevance and need to be set
aside, which we direct.
     8. The appeals are allowed to the aforesaid extent.
S.K.S.                                 Appeals partly allowed.
                                                                   E