1990 (3) TMI 324 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Assistant Commissioner (Int) to make the assessment.
2. Justification of subjecting the turnover of Rs. 2,10,07,675 to tax under the Central Sales Tax Act, 1956, treating the transaction as inter-State sales.
3. Entitlement of the assessee to refund of Rs. 2,00,764.92 with interest under section 33-F of the A.P. General Sales Tax Act, 1957.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assistant Commissioner (Int) to make the assessment:
The Tribunal held that the Assistant Commissioner (Int) did not have jurisdiction to make the assessment. However, the High Court decided to leave this point open and not address it, as the counsel on both sides agreed that it may not be necessary if the Court agrees with the Tribunal on the second point.

2. Justification of subjecting the turnover of Rs. 2,10,07,675 to tax under the Central Sales Tax Act, 1956, treating the transaction as inter-State sales:
The main issue was whether the turnover of Rs. 2,10,07,675 was liable to sales tax under the Central Sales Tax Act, treating the transaction as inter-State sales. The Tribunal found that the correspondence between Dey's Medical Stores, Calcutta, and the assessee did not indicate any contract for sale of goods that caused the movement of goods. The Tribunal concluded that the goods were moved as stock transfers and not as inter-State sales.

The Tribunal scrutinized two primary pieces of evidence:
- Two Purchase Orders: The Tribunal interpreted the letters described as "purchase orders" in the context of the entire correspondence and found that there was no firm commitment from the assessee to supply the goods. The letter dated 7th May, 1984, from the assessee to Dey's Medical Stores clarified that the stated needs did not constitute a firm order.
- Correspondence with Drug Administration: The Tribunal found that the reference to orders from Dey's Medical Stores in the assessee's application for a supplementary licence was not relevant to the import program and could not be linked to any contract of sale.

The Tribunal summarized that the movement of goods from Hyderabad to Calcutta was not due to any contract of sale but was a stock transfer for better business convenience. The goods were sold from the Calcutta office to various parties, including Dey's Medical Stores, and the sales were completed in Calcutta. The Tribunal distinguished this case from other cases like English Electric Company of India Ltd. v. Deputy Commercial Tax Officer and Union of India v. Khosla and Co. Ltd., where there was a clear contract necessitating the inter-State movement of goods.

The High Court agreed with the Tribunal's findings and held that there was no error of law. The Tribunal's conclusion that the transactions were not inter-State sales was upheld, and the T.R.C. was dismissed.

3. Entitlement of the assessee to refund of Rs. 2,00,764.92 with interest under section 33-F of the A.P. General Sales Tax Act, 1957:
Following the decision in the T.R.C., the writ petition for refund was considered. The assessee sought the refund of Rs. 2,00,764.92 with interest, after setting off the balance amount towards admitted tax payable for 1982-83 up to November, 1989. The High Court noted that the State might hold other refundable sums for subsequent years and allowed the writ petition as a consequence of the T.R.C. decision.

Under section 33-C of the Andhra Pradesh General Sales Tax Act, the refund could be withheld if the matter was under appeal or other proceedings. Section 33-F(2) stated that if the refund was withheld, the State must pay interest at 12% per annum from six months after the order until the refund is granted. The High Court directed the State to refund Rs. 2,00,764.92 with simple interest at 12% per annum from 23rd August, 1989, until the date of payment, within four weeks.

Conclusion:
The T.R.C. was dismissed, and the writ petition was allowed, directing the State to refund the specified amount with interest. There was no order as to costs in both cases, and the advocate's fee was set at Rs. 250 in each case.

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