1972 (2) TMI 83 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Justification for the revision of assessments by the assessing officer for the years 1963-64, 1964-65, and 1965-66.
2. Classification of transactions as inter-State sales or stock transfers.
3. Treatment of sales to Tyresoles Concessionaries (P.) Ltd. as inter-State sales.

Issue-wise Detailed Analysis:

1. Justification for the Revision of Assessments:
The primary issue was whether the revised assessments made by the assessing officer for the years 1963-64, 1964-65, and 1965-66 were justified. Initially, the assessing officer accepted the assessee's claim that the turnovers represented stock transfers and excluded them from the taxable turnover. However, the officer later revised the assessments, treating the transactions as inter-State sales. The court examined whether the transactions shown as stock transfers in the assessee's books were indeed inter-State sales.

2. Classification of Transactions as Inter-State Sales or Stock Transfers:
The court analyzed whether the despatches of tyres and tubes made by the factory at Madras to its depots in other States were inter-State sales. The assessing officer's grounds for treating the transactions as inter-State sales included:
- Names of certain buyers earmarked in the pro forma invoices.
- Code words "O.E." indicating sales to original equipment manufacturers.
- Goods moved from the State on prior orders of buyers.

The court found that the authorities had not provided specific evidence of prior orders placed by buyers. The pro forma invoices were explained by the assessee as indicating the serial number of the despatch to a particular destination, not prior orders. The court accepted this explanation and concluded that the finding of prior orders was without basis. It was held that the despatches, except for a few cases with numerical similarity between consignments and deliveries, were stock transfers and not inter-State sales.

3. Treatment of Sales to Tyresoles Concessionaries (P.) Ltd.:
For the year 1965-66, the issue was whether sales amounting to Rs. 6,17,290.61 to Tyresoles Concessionaries (P.) Ltd. were local sales or inter-State sales. The assessee claimed that all elements of sale were completed in Madras, with the buyer arranging for transport outside the State. However, the assessing authority treated the transactions as inter-State sales based on records showing that the seller arranged for the movement of goods to the buyer's factories outside the State.

The court examined letters and correspondence between the parties, indicating that the seller agreed to despatch the goods and bear transport charges. It concluded that transactions where the seller despatched goods to destinations outside the State on the buyer's orders were inter-State sales. However, transactions where the buyer's office in Madras took delivery could not be treated as inter-State sales. The assessing authority was directed to distinguish between these types of transactions and assess them accordingly.

Conclusion:
The court quashed the impugned orders and directed the respondent to determine and assess transactions with numerical similarity between stock transfers and deliveries, as well as transactions where goods were despatched outside the State under orders from Tyresoles Concessionaries (P.) Ltd., as inter-State sales. No orders as to costs were made.