1997 (11) TMI 496 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the turnover of Rs. 9,09,820 for the assessment year 1983-84 is a 'stock-transfer' on consignment basis and not exigible to tax under the Central Sales Tax Act (CSTA).

Issue-Wise Detailed Analysis:

1. Nature of Transactions:
The primary issue revolves around whether the transactions amounting to Rs. 9,09,820 constituted inter-State sales exigible to tax or were merely stock transfers on consignment basis. The assessee-dealers dispatched cocoa products to their agent, PCL, through stock transfer challans between January 20, 1984, and March 31, 1984. The Tribunal held that these transactions were stock transfers and not inter-State sales.

2. Registration and Agency:
PCL was registered under the CSTA from January 30, 1984, and was appointed as the agent of the assessee-dealers on March 4, 1985. The Revenue contended that since the agency was formalized only on March 4, 1985, the transactions prior to this date could not be considered consignment sales. The Tribunal, however, found that the agency need not be evidenced by a written agreement and could be inferred from the nature of the transactions.

3. Legal Precedents:
The judgment referred to several Supreme Court decisions to distinguish between a sale and an agency to sell. The essence of a sale is the transfer of title to the goods, whereas in an agency to sell, the goods are delivered to an agent who sells them on behalf of the principal. The court emphasized that the nature of the relationship between the parties must be determined based on the facts and circumstances of each case.

4. Burden of Proof:
Under Section 6-A of the CSTA, the burden of proving that the movement of goods was due to a transfer and not a sale lies with the dealer. The dealer must furnish a declaration in Form 'F' along with evidence of despatch. The court noted that the CSTA does not mandate a written agreement for the agency but requires the agent to be a registered dealer.

5. Interpretation of Rules:
The court interpreted Rule 12(5) and the first proviso liberally, allowing a single declaration to cover transfers effected during one calendar month. It was held that a later-registered dealer could issue Form 'F' for a pre-registration period, provided the form is used in an informative sense rather than a restrictive one.

6. Examination of Evidence:
The court examined stock transfer challans, sale invoices, and other documents. It found that trade discounts and special discounts mentioned in the challans were either given to ultimate buyers or incurred as expenses by PCL on behalf of the assessee-dealers. This indicated that PCL acted as an agent and not as an independent buyer.

7. Conclusion:
The court concluded that the transactions were consignment sales and not inter-State sales. The entirety of the transactions between January 20, 1984, and March 31, 1984, amounting to Rs. 9,09,820, were deemed to be consignment sales through stock transfer challans and thus not exigible to tax. The Tribunal's decision was upheld, but the court arrived at the conclusion based on its own reasoning.

Final Judgment:
The tax case (revision) was dismissed, affirming the Tribunal's decision that the turnover in question was not exigible to tax under the CSTA. No costs were awarded.