Case Law Details
BASF India Ltd. Vs State of Karnataka (Karnataka High Court)
Karnataka High Court held that Open Purchase Orders are only standing offers and do not constitute a confirmed ‘Agreement to sell’ and movement of goods are mere stock transfers.
Facts- 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.
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.
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 u/s. 3 of the CST Act.
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