1993 (1) TMI 275 - HC - VAT and Sales Tax

Summary

Issues:
Identification of turnover as branch transfer or inter-State sale under the Central Sales Tax Act for assessment years 1984-85 and 1985-86.

Analysis:
The revisions were filed by the assessee, a firm engaged in the manufacture and sales of biscuits, against the Revenue concerning the assessment years 1984-85 and 1985-86 under the Central Sales Tax Act. The assessee claimed exemption for turnovers representing goods transferred to its depots in Tamil Nadu and Pondicherry, which was rejected by the assessing authority, leading to the turnovers being assessed as inter-State sales at 10 percent. Appeals to the first appellate authority and the Sales Tax Appellate Tribunal affirmed the assessment as inter-State sales, prompting the assessee to file revisions. The central issue for consideration was whether the turnovers were branch transfers or inter-State sales.

The assessing authority highlighted five aspects to support the classification of turnovers as inter-State sales: despatches made directly to purchasers, issuance of local sales invoices for the same value and quantity as stock transfer invoices, actual freight charged to purchaser's place, interception of goods meant for different dealers, and full awareness of purchaser's identity before goods movement. The Sales Tax Appellate Tribunal considered these aspects and section 3 of the Central Sales Tax Act, concluding that the movement of goods was due to prior contracts or understanding between parties, regardless of the sale location. The Tribunal found that the branch office acted as a conduit, and the movement was occasioned by buyer's order or contract terms.

The High Court upheld the Tribunal's decision, emphasizing that the movement of goods to Tamil Nadu and Pondicherry was due to buyer's orders or contractual obligations. The Court found no error in the Tribunal's reasoning and conclusion, affirming the turnovers as inter-State sales. The Court also dismissed the argument of insufficient opportunity for the assessee to present its case, noting that the Tribunal had provided ample chances for evidence submission, which the assessee failed to utilize effectively. The Court concluded that the Tribunal's decision to allow the assessee to produce C forms to reduce taxation burden was a fair and equitable relief, ultimately dismissing the tax revision cases.