1994 (11) TMI 373 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the disputed turnover relates to inter-State sales.
2. The effect of the presumption under section 6-A of the Central Act when declarations in form "F" are filed by the assessee and accepted by the assessing authority.

Issue 1: Whether the disputed turnover relates to inter-State sales.

The High Court of Andhra Pradesh examined whether the turnover in question constituted inter-State sales under section 3(a) of the Central Sales Tax Act, 1956. The State argued that the movement of goods was occasioned by the sale of paints by the assessee to the Shipping Corporation of India (S.C.I.), thus qualifying as inter-State sales. The assessee contended that the movement of goods was from the head office to its branches, and the sales to S.C.I. were made by the branches, not occasioning inter-State movement by the sale itself.

The court analyzed the terms of the contract between the assessee and S.C.I., concluding that the contract did not constitute a binding agreement or an agreement to sell but was merely a standing offer to supply goods as and when ordered. The court referred to section 4 of the Sale of Goods Act, 1930, and various Supreme Court judgments, including Balabhagas Hulaschand v. State of Orissa and English Electric Company of India Ltd. v. Deputy Commercial Tax Officer, to determine that the conditions for an inter-State sale were not satisfied in this case. The court held that the movement of goods from the head office to the branches was not occasioned by a sale but was a stock transfer, and the sales occurred only when the branches fulfilled orders from S.C.I.

Issue 2: The effect of the presumption under section 6-A of the Central Act when declarations in form "F" are filed by the assessee and accepted by the assessing authority.

Section 6-A of the Central Sales Tax Act, 1956, allows an assessee to claim that the movement of goods from one State to another was due to stock transfers and not sales, by submitting declarations in form "F." The court noted that the burden of proof lies on the dealer to show that the movement of goods was occasioned by reasons other than sales. The court emphasized that if the assessing authority accepts the declarations in form "F," the movement of goods is presumed to be otherwise than by sale.

In this case, the assessee had submitted form "F" declarations, which were accepted by the assessing authority, indicating that the movement of goods was due to stock transfers. The Deputy Commissioner's withdrawal of the exemption was challenged, and the court found that the revisional authority could not withdraw the exemption without pointing out inaccuracies or incorrect entries in the declarations.

The court concluded that the order of the Sales Tax Appellate Tribunal, which upheld the assessing authority's acceptance of the form "F" declarations and treated the disputed turnover as stock transfers, was correct. The court confirmed that the turnover did not relate to inter-State sales and thus was not taxable under section 3(a) of the Central Act.

Conclusion:

The High Court dismissed the tax revision cases filed by the State, confirming the order of the Sales Tax Appellate Tribunal. The court held that the disputed turnover did not constitute inter-State sales and that the form "F" declarations submitted by the assessee were valid, making the turnover exempt from tax under the Central Sales Tax Act. The petitions were dismissed without costs.