2009 (5) TMI 876 - HC - VAT and Sales Tax

Summary

Issues involved: Determination of whether sales of cotton yarn by the respondent are local sales or inter-State sales for the years 1998-99 and 1999-2000.

Summary:
The High Court of Kerala considered the question raised in tax revision cases filed by the Revenue regarding the nature of sales made by the respondent. The respondent had been enjoying sales tax exemption on local sales but not on inter-State sales. Despite attempts to obtain exemption for inter-State sales, the respondent continued filing returns without tax payment. The assessing officer initially rejected the claim of the sales being local, but it was allowed in the first appeal and confirmed by the Tribunal. The Court noted that the respondent's efforts to convert inter-State sales to local sales seemed aimed at avoiding liability under the CST Act. The respondent failed to provide evidence of the agency transaction or how goods were transported out of Kerala. It was established that goods were transported using delivery notes issued by the respondent, and the introduction of an agent appeared to be a tactic to avoid paying CST. The Court emphasized that even if goods were lifted by an agent, the sales would still be considered inter-State as the goods moved out of the State as per the contract. The orders of the Tribunal and the first appellate authority were deemed factually and legally unsustainable, leading to the reversal of those orders and restoration of the assessment order.

The revision cases were allowed accordingly.