1992 (7) TMI 320 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the disputed turnover should be considered as an inter-State sale or a stock transfer.
2. Whether the revisional authority was justified in setting aside the order of the first appellate authority.
3. Application of legal principles from previous judgments to the present case.

Detailed Analysis:
1. The primary issue in this case is whether the turnover in question should be treated as an inter-State sale or a stock transfer. The assessee, engaged in the business of electrical goods and drawing materials, argued that the transfer to other states was merely a stock transfer from the head office to branches and not an inter-State sale under the Central Sales Tax Act. The Joint Commissioner, through a suo motu power under section 34 of the Tamil Nadu General Sales Tax Act, revised the assessment for the three years, bringing the disputed turnover to taxation due to the absence of "C" forms. The revisional authority found that the goods were dispatched by the assessee at Madras, earmarking them for customers in other states, leading to the conclusion that it constituted an inter-State sale. The court, after considering the arguments, referred to previous judgments and held that the transaction should be treated as an inter-State sale under section 3(a) of the Central Sales Tax Act.

2. The second issue revolves around the justification of the revisional authority in setting aside the order of the first appellate authority. The first appellate authority had allowed the claim of the assessee, considering the transaction as a stock transfer from the head office to branches. However, the revisional authority, upon reviewing the assessment records, concluded that the first appellate authority's decision was erroneous in law and reinstated the order of the assessing officer. The court found that the first appellate authority had not adequately examined the matter, leading to an incorrect decision. The court referred to a Division Bench decision and emphasized that the movement of goods in pursuance of a contract or as a necessary incident to the sale determines whether it constitutes an inter-State sale.

3. The court extensively analyzed legal principles established in previous judgments to determine the nature of the transaction in question. Referring to cases such as English Electric Company of India Ltd. v. Deputy Commercial Tax Officer and Sahney Steel and Press Works Ltd. v. Commercial Tax Officer, the court reiterated that the movement of goods from the registered office, occasioned by the buyer's order, constitutes an inter-State movement. Relying on these precedents, the court held that the transaction under consideration cannot be categorized as a stock transfer but only as an inter-State sale under section 3(a) of the Central Sales Tax Act. Consequently, the appeals were dismissed, and no costs were awarded.