2009 (12) TMI 862 - HC - VAT and Sales Tax

Tribunal granting the relief in favour of the assessee in respect of the turnover of ₹ 4,41,68,207 as consignment sale and deleting the penalty in a sum of ₹ 4,41,682 in respect of the assessment year 1992-93 challenged Held that - It is on record that the assessee filed a register in form 16 showing the particulars of goods consigned on each occasion agent-wise. The fact that on the strength of the bills the consignor s bankers are willing to trust the consignor and extend to him credit on the strength of the bills produced by him to the bank will have no bearing on the question as to whether the sale effected is a consignment sale or local sale. For the purpose of determining the character of the sale, the ability of the consignor to obtain credit from its bankers on the strength of the bills can have no impact. The documents produced before the appellate authority were examined and accepted as genuine and cover all the transactions for the year claimed as consignment sale. They cannot cease to be consignment sales merely because the authorisation letter has not been produced or merely because the agreement does not contain the clause with regard to sales return. Therefore, grounds taken by the Revenue to contend that the order of the Tribunal is erroneous cannot be accepted as valid grounds nor can be accepted as grounds based on the statutory requirements. W.P. dismissed.

Summary

Issues:
Challenge to Sales Tax Appellate Tribunal's order granting relief in favor of the assessee regarding consignment sale turnover and penalty deletion for the assessment year 1992-93.

Analysis:
The Department filed a writ petition challenging the Sales Tax Appellate Tribunal's order favoring the assessee regarding the turnover of consignment sale and penalty deletion. The assessing officer disallowed the consignment sale turnover of Rs. 4,41,68,207 and imposed a penalty under relevant tax acts. The Appellate Assistant Commissioner confirmed the assessment but reduced the penalty. The Tribunal, in the impugned order, set aside the assessment and penalty. The Department contended that the Tribunal's order was erroneous due to non-compliance with statutory rules and absence of sales return clause in the agreement with agents.

The High Court examined the details provided by the assessee, including a register showing consigned goods, the written contract, and compliance with statutory requirements. Referring to legal precedents, the Court emphasized that if statutory requirements are met, authorities cannot exceed their jurisdiction. The absence of a sales return clause does not automatically disqualify a transaction as consignment sale. The Court cited a case where consignment sale could be proven through various details, not solely based on specific documents. The nature of the sale as consignment depends on how the sale is executed, particularly if the agent acts on behalf of the consignor until the ultimate buyer completes the sale post-delivery.

The Court rejected the Revenue's arguments, stating that the inability to produce an authorization letter or absence of a sales return clause does not invalidate the transactions as consignment sales. The ability of the consignor to obtain credit based on bills does not impact the nature of the sale. The documents submitted were deemed genuine and covered all transactions claimed as consignment sales. Consequently, the Court dismissed the writ petition, finding it lacking in merit and declined to award costs.