1991 (4) TMI 424 - HC - VAT and Sales Tax

Summary

Issues: Disallowance of exemption under section 6(2) of the Central Sales Tax Act.

The judgment revolves around the disallowance of exemption on a turnover of Rs. 1,97,125 towards E1 sales falling under section 6(2) of the Central Sales Tax Act, 1956. The Sales Tax Appellate Tribunal, Main Bench, Madras, concluded that the transaction handled by the assessee was eligible for exemption under section 6(2) of the Act but restricted the exemption to the extent of E1 form sales for Rs. 1,71,475 only. The Revenue challenged this decision, seeking disallowance of exemption on the remaining turnover of Rs. 25,650. The assessing authority initially disallowed the exemption claimed by the assessee under section 6(2) of the Act, contending that the goods were not sold by transfer of document as required by the provision. However, the Tribunal disagreed, noting that the assessee had produced E1 forms and had a valid contract for the supply of goods. The Tribunal found that the exemption claimed was justified based on the evidence presented.

The interpretation of section 6(2) of the Central Sales Tax Act was crucial in this case. Section 6(2) provides that subsequent sales during the movement of goods from one state to another, effected by a transfer of documents of title, shall not be subject to tax under the Act. The dealer must furnish E1 certificates to claim this exemption. The Tribunal, after reviewing the evidence, found that the assessee had not taken delivery of the goods and that the goods were directly sent to the buyer by the outside State sellers. The Tribunal also noted that the freight charges were paid by the buyer department, indicating that the goods were not handled by the assessee. The Tribunal concluded that the assessee was entitled to exemption on the turnover covered by E1 certificates as it fell within the purview of section 6(2) of the Act.

The Court emphasized that the assessing authority's finding against the assessee was based on mere surmises and conjectures, lacking proper evidence. The Court upheld the Tribunal's decision, stating that it was based on a correct appreciation of the evidence and material on record. Consequently, the Court found no infirmity in the Tribunal's order and dismissed the tax revision case. The judgment highlighted the importance of proper evidence and correct interpretation of the law in tax matters, affirming the Tribunal's decision to allow the exemption claimed by the assessee under section 6(2) of the Central Sales Tax Act.