2026-VIL-890-CESTAT-DEL-CST
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VAT Tribunal

Central Sales Tax Act, 1956 - Stock Transfer vs Inter-State Sale - Movement of goods from manufacturing unit to buffer and satellite depots in other States pursuant to distribution and consignment agreement – Transfer of goods under stock transfer notes and lorry receipts - Whether the movement of goods from the State of Maharashtra to buffer and satellite depots in other States constitutes inter-State sale liable to Central Sales Tax under Section 3(a) of the CST, 1956 or merely constitutes stock transfer by the manufacturer to its own depots – HELD - For a transaction to be inter-State sale under section 3(a), there must be a sale of goods and such sale should occasion the movement of goods from one state to another. The agreement and MoU merely provide a broad framework and constitute a standing offer, not a binding contract of sale. The agreement does not mandate purchase of any specified quantity, specify product specifications, or determine price. Appropriation of goods occurs only at depot level upon placement and acceptance of purchase orders from the distributor and other buyers - The several precedents relied upon by the State are distinguished as in those cases there were binding agreements specifying quantity and destination prior to movement, whereas here goods moved for inventory replenishment based on market estimation without linkage to any prior purchase order - An open purchase orders lacking specified quantity do not constitute contracts of sale but are standing offers, and movement of goods to depots constitutes mere stock transfer. The goods at satellite depots form a common indistinguishable stock comprising goods manufactured at different units, and source cannot be traced with certainty, further supporting that appropriation occurs only at depot level upon specific purchase order - The Form F submitted by the appellant cannot be rejected for minor procedural defects when the manufacturer possessed lorry receipts constituting valid proof of dispatch under section 6A of the Central Sales Tax Act - The impugned orders passed by Maharashtra Sales Tax Tribunal are set aside and the appeals are allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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