Carlsberg India Pvt Ltd Vs State of Rajasthan (CESTAT Delhi)
Conclusion: Central Sales Tax was not applicable on mere stock transferring of beer from manufacturing units to depots situated in other State as movement of goods could not be considered incidental to the Master Agreement
Held: The issue involved in these appeals relates to demand of central sales tax on movement of goods from the manufacturing units of assessees situated in the State of Rajasthan to their depots in the State of Bihar and the State of Jharkhand. The impugned order had treated the movement to be arising out of inter-state supply of goods instead of inter-state stock transfers as claimed by assessee. Assessee hold licenses for manufacture and sale of liquor under the Rajasthan Excise Act, 1950 and were also registered dealers under the Rajasthan Value Added Tax Act, 2003 as well as under the Central Sales Tax Act, 1956. Assessee-company manufacture beer under various brand names at their breweries located in the State of Rajasthan. Various States had created separate entities which are State Beverages Corporations to facilitate and regulate retail sale of liquor, including beer, in their States. The State of Bihar framed a policy known as the Liquor Sourcing Policy for sourcing of all kinds of liquor, including beer. Clause 6 of the Liquor Policy provided that the supplies to the Corporation should be based on Order for Supply, to be issued by the Corporation. It further provided that the Corporation should be under no obligation to procure any specified minimum quantities of liquor and the quantity to be procured shall depend upon the demand of the product. Accordingly, the Corporation issued OFS on the local depots of assessee situated in State of Bihar for supply of specified quantity of the beer. The OFS had a validity period within which goods were required to be delivered to the depots of the Corporation. It was held that in terms of the Liquor Policy of the State of Bihar, the Corporation was under no obligation to procure any specified minimum quantities of beer. The OFS had a validity period within which the goods were required to be delivered to the Corporation. Carlsberg was, therefore, justified in asserting that in order to comply with the requirement of maintaining a minimum stock at the local depots in the State of Bihar and also to ensure the delivery of beer to the Corporation within the validity period prescribed in the OFS, it had to effect inter-state stock transfer of beer from its factory in the State of Rajasthan to its depots in the State of Rajasthan from time to time through Form-F, depending on estimation of market demand and that it was only when OFS was placed by the Corporation on the depots of the assessee in the State of Bihar that the goods were sold. Thus, it was the OFS that concluded the contract of sale between Carlsberg and the Corporation. The movement of goods from the State of Rajasthan to the depots of Carlsberg in the State of Bihar, therefore, could not be said to have been occasioned by reason of any sale agreement. Assessee treated the sale from its depots in the State of Bihar to the Corporation in the State of Bihar as sale and paid local VAT. There could, therefore, be no manner of doubt that the movement of goods from the manufacturing units of assessee situated in the State of Rajasthan to the depots of assessee in the State of Bihar or the State of Jharkhand was not occasioned by any prior contract of sale or agreement to sell. Assessee had merely stock transferred beer from the manufacturing units of assessee situated in the State of Rajasthan to the depots of assessee situated in the State of Bihar or the State of Jharkhand. None of the clauses of the Master Agreement contemplated manufacture and delivery of liquor to the depots of the Corporation from outside the State of Bihar. The Master Agreement merely granted an option to the Corporation to purchase goods at a subsequent date as and when required by the Corporation. If the Corporation did not place OFS on assessee, the latter could not sue the Corporation for damages because the Master Agreement has not been breached. It was, therefore, clear that none of the clauses of the Master Agreement contemplate or refer to any inter-state delivery of the goods from the State of Rajasthan to the State of Bihar or the State of Jharkhand. The movement of goods could not also be considered incidental to the Master Agreement.
